Danaher's Growing Leverage To Life Sciences Improves The Long-Term Outlook

As investors have become a little more concerned that the industrial recovery story has peaked, Danaher's (DHR) far larger skew towards health and life sciences has started looking better and better. At the risk of oversimplification, I think the greater skew toward health care/life sciences can partly explain why Danaher and Roper (ROP) have outperformed peers like 3M (MMM), Honeywell (HON), and Illinois Tool Works (ITW) over the last three months (although industrial-heavy Fortive (FTV) has led the group, so it's not a flawless hypothesis…).

Danaher doesn't look especially cheap, but that's been the norm for much of the company's history and it hasn't prevented the company from outperforming the S&P 500, as management continues to apply a proven successful model. With greater exposure toward long-term growth opportunities like diagnostics and bioproduction, I like Danaher's mix even if the valuation is not scintillating.

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Danaher's Growing Leverage To Life Sciences Improves The Long-Term Outlook