As short-cycle industrial end-markets weaken further, Danaher’s (DHR)
exposure to acyclical growth markets like life sciences and diagnostics
looks better and better. A decent top-line beat and acceleration in
those two segments certainly helps bolster the argument for Danaher as a
company and a stock that has much less to worry about as the global
economy slows, and margin growth across most of the business certainly
doesn’t hurt either.
This is the broken record part
of the show, but valuation remains the prime issue with Danaher. I have
no doubt that I’ll hear again from the “you buy this and hold forever”
crowd, but there are a number of stocks where that argument has been
made before and investors ended up seeing big losses as circumstances
changed. Danaher looks priced for a mid-single-digit annualized return
on par with Honeywell (HON) or Dover (DOV),
and with what I see as a high likelihood that
industrial/mulit-industrial earnings estimates and multiples will be
heading lower in the second half, Danaher’s valuation could continue to
remain elevated as the company is poised to offer a lot more core growth
than many of its peers.
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Strong Acyclical Growth Burnishing Danaher's Growth Star Status
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