U.S. Markets close in 6 hrs 28 mins
  • S&P 500

    3,676.89
    +10.17 (+0.28%)
     
  • Dow 30

    30,040.38
    +70.86 (+0.24%)
     
  • Nasdaq

    12,393.75
    +16.56 (+0.13%)
     
  • Russell 2000

    1,848.70
    +10.67 (+0.58%)
     
  • Crude Oil

    45.76
    +0.12 (+0.26%)
     
  • Gold

    1,848.50
    +7.40 (+0.40%)
     
  • Silver

    24.33
    +0.20 (+0.82%)
     
  • EUR/USD

    1.2167
    +0.0018 (+0.1460%)
     
  • 10-Yr Bond

    0.9580
    +0.0380 (+4.13%)
     
  • Vix

    20.70
    -0.47 (-2.22%)
     
  • GBP/USD

    1.3534
    +0.0082 (+0.6063%)
     
  • USD/JPY

    103.9200
    +0.0600 (+0.0578%)
     
  • BTC-USD

    19,080.73
    -176.85 (-0.92%)
     
  • CMC Crypto 200

    374.46
    -4.79 (-1.26%)
     
  • FTSE 100

    6,528.69
    +38.42 (+0.59%)
     
  • Nikkei 225

    26,751.24
    -58.13 (-0.22%)
     

Danaher (DHR) Prices Public Offering of $1B Senior Notes

Zacks Equity Research
·4 min read

Danaher Corporation DHR yesterday announced the pricing of $1 billion worth of senior notes. Subject to fulfillment of closing conditions, the offering will likely be closed on Oct 6, 2020.

It is worth mentioning here that the company’s shares have gained 0.6% on Sep 29, ending the trading session at $211.01.

Inside the Headlines

As mentioned, the notes offered are due to expire on Oct 1, 2050, and carry a coupon rate of 2.600%. It has been offered to the public at 98.970% of the principal amount. Interest on notes will be paid semi-annually, each on Apr 1 and Oct 1. The first interest payment will be made on Apr 1, 2021.

Notably, the issuer has the option to redeem the senior notes before Apr 1, 2050, at a redemption price, which is greater than the principal value of the notes and the present value of the pending payments and any accrued and unpaid interests, if applicable. The notes can be redeemed on or after Apr 1, 2050, for a value equal to par value plus accrued and unpaid interest.

Notably, the offering’s rating is Baa1 by Moody’s and BBB+ by S&P.

Danaher anticipates securing net proceeds of $980 million from the note offerings. The proceeds are net of underwriting discounts and issuance-related costs. The proceeds will be used for satisfying general corporate purposes, including funding for working capital and capital expenditure needs, refinancing of indebtedness (outstanding), and other purposes.

We believe that the offering of senior notes will increase the company’s debts, and thereby might inflate its financial obligations and hurt profitability.

Danaher’s Debt Profile

It is worth mentioning here that the company's long-term debt at the end of the second quarter of 2020 stood at $22.4 billion, reflecting a decrease of 1.6% from the previous quarter and an increase of 4.2% from the 2019 level.

Notably, Danaher borrowed $7,691.3 million in the first half of 2020 through instruments with a maturity of more than 90 days. Also, the company repaid $3,750 million of such borrowings during the same time frame. At the end of second-quarter 2020, Danaher’s total debt to total capital stood at 38.1%.

Its ability to fund financial obligations — reflected from its times interest earned — decreased from 25.3X at the end of first-quarter 2020 and 31.4X at the end of the fourth quarter of 2019 to 20.0X at the end of second-quarter 2020. High debts and the inability to repay them might be concerning for Danaher in the quarters ahead.

Zacks Rank, Price Performance and Estimate Trends

With a market capitalization of approximately $148.8 billion, Danaher currently carries a Zacks Rank #2 (Buy). The company is likely to benefit from growth opportunities within Life Sciences and Diagnostics segments, acquired assets, solid product offerings, focus on innovation and shareholder-friendly policies.

In the past three months, the company’s share price has gained 19.1% compared with the industry’s growth of 8.6%.



Also, the Zacks Consensus Estimate for the company’s earnings has been increased 0.9% to $5.47 for 2020 and 0.8% to $6.32 for 2021. Notably, there was one upward revision in estimates for 2020 and 2021 while no downward revision was recorded during the past two months.

Danaher Corporation Price and Consensus

Danaher Corporation Price and Consensus
Danaher Corporation Price and Consensus

Danaher Corporation price-consensus-chart | Danaher Corporation Quote

Other Stocks to Consider

Three other similar-ranked stocks in the industry are HC2 Holdings, Inc. HCHC, Icahn Enterprises L.P. IEP and Raven Industries, Inc. RAVN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, the bottom line estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 166.67% for HC2 Holdings, 402.22% for Icahn and 212.5% for Raven.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Raven Industries, Inc. (RAVN) : Free Stock Analysis Report
 
Icahn Enterprises L.P. (IEP) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
HC2 Holdings, Inc. (HCHC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research