The life science tools market doesn't offer quite as much organic
growth as many investors seem to think, but the high barriers to entry,
relatively short product cycles, and consumables/service streams do tend
to support good margins for the established players. The question
facing Agilent (NYSE:A)
isn't so much about whether the company can remain a strong player in
markets like separation, mass spec, and pathology, but rather whether
the company can reverse a long history of failing to live up to
expectations and truly make the most of its technology and market
positions.
At this point I'm a skeptic. Agilent shares may hold some appeal if you believe they can generate Waters-level (NYSE:WAT)
FCF margins relatively soon, but I consider that to be a very ambitious
expectation. Likewise, I'm a little concerned about the company's
relatively weaker position in clinical markets next to Waters, Thermo Fisher (NYSE:TMO), Danaher (NYSE:DHR), and Bruker (NASDAQ:BRKR).
Although I have little doubt that Agilent as a company will be fine,
I'm concerned that there's too much optimism in the shares now that
Agilent operates as a pure-play on life science and science tools.
Read more here:
Newly Agile Agilent May Yet Be Weighed Down By Expectations
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