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On Wednesday, BofA Securities adjusted its outlook on Danaher Corporation (NYSE:DHR) shares, increasing the price target to $275 from the previous $270, while maintaining a Neutral rating on the stock.
The adjustment follows observations of improved market dynamics in the bioprocess sector. According to the firm, most excess inventory issues have been resolved and customers are resuming normal consumables ordering patterns.
The analysis suggests that this positive trend will likely persist into the third quarter, with bioprocessing revenues expected to show a low single-digit year-over-year decline, an improvement over the high single-digit decline witnessed in the second quarter.
Danaher has anticipated a mid single-digit sequential decrease in its Biotechnology segment for the third quarter, reflecting the typical seasonality patterns seen before the pandemic.
Despite a projected low single-digit core sales decline overall in the third quarter, the firm believes that the reasons provided, possibly coupled with a conservative approach, justify the outlook. This perspective is especially noteworthy considering that the guidance falls below the consensus expectations.
The commentary from BofA Securities comes in the wake of the recent financial results from Danaher's peer, Sartorius, which were released last week. The improvement in bioprocess market dynamics highlighted by Danaher is in line with the performance indicators from Sartorius, reinforcing the view of a sector on the mend.
The outlook for Danaher also takes into account an expected decrease in quarter-over-quarter respiratory testing, which contributes to the anticipation of overall sales decline in the third quarter. Despite this, the firm's analysis suggests the underlying market conditions for Danaher are showing signs of returning to a pre-pandemic normalcy.
In other recent news, Danaher Corporation has reported a solid Q2 performance for 2024, highlighting increased revenue, earnings, and cash flow. The company's Q2 revenue reached $5.7 billion, surpassing expectations.
The bioprocessing business is witnessing a positive momentum, and its subsidiary Cepheid is strengthening its position in molecular testing. Despite a core revenue decline, Danaher anticipates high single-digit core revenue growth and robust cash flow generation as key drivers for long-term value creation.
The company is also actively pursuing mergers and acquisitions. In other developments, Cepheid's 4-in-1 tests for COVID-19, Flu A and B, and RSV are projected to generate substantial revenue. These recent developments underscore Danaher's commitment to sustainable growth and value creation.
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