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Danaher (DHR) Gains 19% in 3 Months: What's Driving It?

Zacks Equity Research
·3 min read

Shares of Danaher Corporation DHR have gained notably in the past three months. Growth opportunities within Diagnostics and Life Sciences segments, focus on product quality and innovation, and sound core sales projections by the company seem to have boosted sentiments for the stock.

The Washington, DC-based company belongs to the Zacks Diversified Operations industry — which is among the top 34% (with a rank of 85) of Zacks industries. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, Danaher’s shares have gained 18.7% compared with the industry’s growth of 8.5%. Notably, the S&P 500 has risen 8.2% during the same period.



 

Factors Influencing the Stock

In the past three months, the company has reported results for second-quarter 2020, with an earnings beat of 35.8%. Also, sales in the quarter surpassed estimates by 6.7%. The company is impressed with its growth opportunities in the Life Sciences and Diagnostics segments. It believes that healthy sales of automation and bioprocessing genomic products as well as focus on innovation will be boon for Life Science. Further, product launches and solid product demand related to molecular diagnostics and acute care diagnostics will be boons for Diagnostics.

For third-quarter 2020, Danaher anticipates core sales in the Life Sciences segment to increase in low-double digits, while that in Diagnostics to grow in high-single digits. Also, the company believes that its core sales will likely increase in low to mid-single digits in the quarter. Cytiva is expected to contribute 300-400 basis points to core sales growth, including which the company’s core sales growth will be in mid- to high-single digits.

Further, Danaher’s superior product quality, shareholder-friendly policies (quarterly dividend rate was hiked by one cent in February 2020) and efficient workforce are other tailwinds. Also, slowly recovering manufacturing activities in the United States and revival in the country’s stock market might have supported the company’s price improvement.

Currently, the Zacks Consensus Estimate for its earnings is pegged at $5.47 for 2020 and $6.32 for 2021, marking an increase of 0.9% and 0.8% from the respective 60-day-ago figures. Notably, one upward revision in earnings estimates was recorded for 2020 and 2021. There was no downward revision for both 2020 and 2021.

Danaher Corporation Price and Consensus

 

Danaher Corporation Price and Consensus
Danaher Corporation Price and Consensus

Danaher Corporation price-consensus-chart | Danaher Corporation Quote

Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.

Danaher’s Performance Versus Industry Players

The company outperformed three companies in the industry — namely Griffon Corporation GFF, 3M Company MMM and Crane Co. CR — in the past three months. During the period, Griffon, 3M and Crane’s shares have gained 8.9% and 3.7%, and lost 14.1%, respectively.

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