Danaher (DHR) Benefits From Business Strength Amid Risks
Danaher Corporation DHR has been benefiting from strength in its Life Sciences segment driven by stable demand in the academic and life science research markets. Growth in demand for plasmids, proteins, gene writing and editing solutions augurs well for the segment.
The company has been witnessing positive responses from its new products like IDBS' Polar Insight and Molecular Devices' CellXpress.ai, which help accelerate the drug discovery process and bring new therapies to market faster. Also, in the Diagnostics unit, new solutions like Beckman Coulter's DxI 9000 next-generation immunoassay analyzer are gaining popularity in the market.
DHR intends to strengthen and expand its businesses through buyouts. In December 2023, Danaher acquired Abcam plc, a global supplier of protein consumables, for $5.7 billion. Abcam's long track record of innovation, outstanding product quality and breadth of antibody portfolio are expected to help Danaher solve some of the world's greatest healthcare challenges. This buyout expanded the company’s Life Sciences segment. Acquisitions boosted the company’s total revenues by 0.5% in 2023.
Danaher remains committed to increasing shareholders’ value through dividend payments and share repurchases. For instance, in 2023, it paid dividends of $821 million, reflecting an increase of 0.4% year over year. In February 2024, the company hiked its dividend by 12.5% to 27 cents per share. DHR has a dividend payout ratio of 11% and an annualized dividend yield of 0.38%.
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In the past three months, this Zacks Rank #3 (Hold) company has gained 10.4% compared with the industry’s 5.9% growth.
However, weakness in the Biotechnology and Diagnostics segments raises concerns for the company. The impact of lower demand for COVID-related testing, vaccines and therapeutics in the market has been weighing on the performance of both the Diagnostics and Biotechnology segments in 2023. These segments’ revenues declined 11.5% and 18%, respectively, on a year-over-year basis.
High debt levels have also been major concerns for DHR as it raises financial obligations and might drain its profitability. Danaher exited 2023 with a long-term debt of $16.7 billion. Its current liabilities were $8.3 billion, higher than the cash equivalents of $5.9 billion.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Griffon Corporation GFF presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 42%. The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 3.9% in the past 60 days.
Carlisle Companies Incorporated CSL currently flaunts a Zacks Rank #1. CSL delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 8.2%.
Vector Group Ltd VGR currently sports a Zacks Rank #1. It delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the consensus estimate for VGR’s 2024 earnings has improved 6.9%.
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Danaher Corporation (DHR) : Free Stock Analysis Report
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