Here's Why You Should Steer Clear of Danaher (DHR) Stock Now
Danaher Corporation DHR is grappling with raw material cost inflation and lower demand for its COVID-related products.
Weakness in the Biotechnology and Diagnostics segments due to a decrease in the sale of COVID-related products has been weighing on this Zacks Rank #5 (Strong Sell) company’s operations. In the Diagnostics segment, revenues declined 11.5% year over year in the first half of 2023 due to lower COVID-related respiratory testing volumes. In the Biotechnology segment, revenues fell 16.4% year over year.
Due to lower demand for COVID-19 testing, vaccines and therapeutics, Danaher expects total core revenues to decline in the low to mid-teens percentage range for the third quarter. For the full year, the company expects a decline in the high-single to low-double-digits range.
Danaher Corporation Price and Consensus
Danaher Corporation price-consensus-chart | Danaher Corporation Quote
The escalating cost of sales poses a threat to Danaher’s bottom line. The company’s cost of sales increased 8.9% year over year in 2022 due to inflation in raw material costs. In the second quarter of 2023, cost of sales increased 2.8% year over year to $3,116 million. Logistics problems and supply chain issues also remain concerns for the company.
International operations expose Danaher to risks stemming from unfavorable movements in foreign currencies. In the first six months of 2023, foreign currency headwinds adversely impacted net sales by 1.5%.
The negativity surrounding the stock is evident from the Zacks Consensus Estimate for 2023 earnings being revised downward by 5.8% in the past 60 days.
Stocks to Consider
Below we discuss some better-ranked industrial stocks:
Flowserve Corporation FLS presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 6.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Flowserve has an estimated earnings growth rate of 79.1% for the current year. The stock has jumped 31% so far this year.
Graham Corporation GHM currently flaunts a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 243.1%, on average.
Graham has an estimated earnings growth rate of 400% for the current fiscal year. The stock has rallied 68.1% so far this year.
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Danaher Corporation (DHR) : Free Stock Analysis Report
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