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Danaher (DHR) Stock Rise 25% in 3 Months: What's Driving It?

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Shares of Danaher Corporation DHR have gained impressively in the past three months. Sound financial performance along with solid fundamentals and earnings growth prospects supports the stock’s attractiveness. It presently carries a Zacks Rank #2 (Buy).

The company engages in manufacturing various products for use in commercial, professional, industrial and consumer markets. It belongs to the Zacks Diversified Operations industry. The industry is in the top 23% (with a rank of 58) of more than 250 Zacks industries. It is based in Washington, DC, and has a market capitalization of $228.9 billion.

In the past three months, the company’s shares have gained 25.2% compared with the industry’s growth of 4.5%. Notably, the S&P 500 has gained 7.1% during the same period.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Factors Influencing the Stock

In the past three months, Danaher delivered financial results for the second quarter of 2021. Its earnings beat in the quarter was 20.6%, while sales surprise was 7.8%. Driven by year-over-year sales growth of 36.5% and margin improvement, the company’s earnings in the second quarter expanded 70.8%.

Beside sound financial performance, Danaher’s focus on product quality and innovation, strengthening market demand, and its efficient workforce are some other tailwinds. The pandemic-led businesses are expected to increase core sales by 10% in 2021 (with a high-single-digit increase expected for the third quarter).

Core revenues are predicted to grow in the mid to high-teens range for the third quarter and high-teens for 2021. Notably, COVID and non-COVID-related demand for bioprocessing products, molecular testing, consumables and equipment are likely to be healthy in the year. Also, the company’s sound shareholder-friendly policies raise its appeal.

Regarding the company’s inorganic actions, Danaher agreed to acquire Fargo, ND-based Aldevron for $9.6 billion in June. Upon completion, the buyout is anticipated to strengthen Danaher’s business in the genomic medicine field.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $9.40 for 2021 and $9.60 for 2022, marking increases of 5.5% and 6.7% from the respective 90-day-ago figures. The consensus estimate for third-quarter earnings improved from $2.03 per share to $2.13. Notably, there were five upward revisions for the third quarter in the past 90 days, while seven and eight positive revisions were recorded for 2021 and 2022, respectively.

Danaher Corporation Price and Consensus

Danaher Corporation Price and Consensus
Danaher Corporation Price and Consensus

Danaher Corporation price-consensus-chart | Danaher Corporation Quote

Such upward revisions in earnings estimates are reflective of healthy operating conditions for the company.

Danaher’s Performance Versus Industry Players

Danaher’s performance in the past three months has been better than Carlisle Companies Incorporated CSL, Crane Co. CR and 3M Company MMM. The companies belong to the same industry as Danaher. In the past three months, Carlisle’s shares have gained 9.4% and Crane expanded 5.2%, while 3M declined 4.4%.

Notably, Carlisle and Crane presently carry a Zacks Rank #2, while 3M has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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