Scotiabank upgrades Danaher stock to Sector Outperform on growth outlook

Investing.com - Scotiabank (TSX:BNS) upgraded Danaher (NYSE:DHR) from Sector Perform to Sector Outperform on Friday, setting a price target of $275.00. According to InvestingPro data, Danaher, currently trading at $204.71, shows a P/E ratio of 39.69 and maintains strong financial health with an overall "GOOD" rating.

The upgrade reflects Scotiabank’s positive outlook on Danaher’s positioning in late-stage development and bioprocessing spending for pharmaceutical and biotech sectors, as well as its diagnostics business. The firm noted Danaher has only low single-digit exposure to U.S. A&G.

Following Danaher’s first quarter 2025 results, the company largely maintained its guidance for the year. Scotiabank believes Danaher is on track to accelerate its growth profile over the next 12-18 months, potentially reaching its long-range plan of high single-digit top-line compound annual growth rate.

Scotiabank expressed bullishness about Danaher’s "significantly transformed business model" achieved over recent years, citing higher top-line growth potential, improved margins, and free cash flow conversion.

The firm also highlighted Danaher’s better alignment with faster-growing end markets, operational execution capabilities through the Danaher Business System, and capital deployment capacity as factors supporting the upgrade.

In other recent news, Danaher Corporation has announced several significant developments. The company reported that its shareholders approved executive compensation and the election of thirteen directors, as well as the ratification of Ernst & Young LLP as the independent registered public accounting firm for 2025. These decisions were part of the outcomes from the annual shareholder meeting. Additionally, Danaher has partnered with AstraZeneca (NASDAQ:AZN) to advance AI-driven diagnostic tests, focusing on precision medicine, utilizing their Centers for Enabling Precision Medicine.

In leadership updates, Danaher appointed Martin Stumpe as Chief Technology and AI Officer and Greg Milosevich as Executive Vice President of Life Sciences. Stumpe, who joined Danaher in 2024, will play a key role in the company’s digital transformation efforts. Milosevich, who has been with Danaher since 2010, will oversee the Life Sciences business. Analyst firm Stifel maintained a Buy rating for Danaher, setting a price target of $260, citing strong performance in the bioprocess sector and effective management strategies.

Stifel analysts also noted that Danaher’s guidance suggests a low single-digit growth year in 2025, with potential acceleration in 2026. The company’s ability to manage tariffs and its cost-saving initiatives were highlighted as factors contributing to a positive outlook. These recent developments underscore Danaher’s ongoing efforts to strengthen its leadership team and expand its capabilities in the life sciences and diagnostics sectors.

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