Danaher Stays at Neutral - Analyst Blog

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On Dec 13, we reiterated our Neutral recommendation on Danaher Corp ( DHR ) largely due to its modest third quarter performance. We prefer to remain on the sidelines until we see substantial organic growth and improvement in the overall industry environment.

Why a Neutral Recommendation?

On Oct 17, Danaher reported its third-quarter results, wherein the bottom and top lines beat the Zacks Consensus Estimate by 1.2% and 2.1%, respectively.  The healthy increase in earnings was mainly attributable to core revenue growth and better margin expansion. Specific initiatives for new product development and increased investments were also positive drivers for the company.

Overall we are encouraged by the company's performance in the last quarter. The company is investing more in R&D to drive product development and expansion. In the third quarter, Danaher also launched a couple of new diagnostic equipment, namely AU5800 and DxH 600, which would contribute to its revenues going forward. The company was also able to drive organic growth and margin expansion, driven by its Danaher Business System (DBS).

However, Danaher's revenues declined in two of its segments - Environmental and Test & Measurement in the reported quarter. Also, prevailing soft economic conditions in the U.S and some parts of Europe, along with tougher comparables and trimmed fiscal outlook are providing limited visibility into company's future. Thus, we prefer to remain on the sidelines and maintain our Neutral recommendation on Danaher.

Other Stocks to Consider

Danaher currently has a Zacks Rank #3 (Hold). Some other players in the industry worth mentioning include CLARCOR Inc. ( CLC ), Hutchison Whampoa Limited ( HUWHY ) and ITT Corporation ( ITT ). All these three stocks carry a Zacks Rank #2 (Buy).



CLARCOR INC (CLC): Free Stock Analysis Report


DANAHER CORP (DHR): Free Stock Analysis Report

HUTCHINSON WHAM (HUWHY): Get Free Report

ITT CORP (ITT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: CLC , DBS , DHR , HUWHY , ITT

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