Danaher Has Set The Table For A Brighter, Faster-Growing, And Higher-Margin Future

Danaher (DHR) has been busy this year. In addition to the transformative acquisition of General Electric’s (GE) Biopharma business (which Danaher will rename “Cytiva”), Danaher has executed an efficient disposal of the Envista (NVST) dental business, a move that immediately improved the company’s growth rate and margins. These developments have hardly gone unnoticed, as the already-popular Danaher stock has shot up more than 50%, trouncing the roughly 26% year-to-date performance of its industrial peer group (which really isn’t a peer group anymore) and keeping pace with Thermo Fisher (TMO).

Danaher isn’t cheap now, but that’s nothing new, as there have been only a relatively few windows of opportunity in recent years where Danaher looked meaningfully undervalued. Although I’m disinclined to be all that negative on the stock of a company that I think will generate mid-single-digit core growth in a 2020 where many industrials will still be struggling, the shares are already trading at over 20x my 2020 EBITDA estimate (adjusted for Cytiva).

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Danaher Has Set The Table For A Brighter, Faster-Growing, And Higher-Margin Future