Danaher stock isn’t rising despite solid earnings — which leaves us wondering what’s next
Posted by Times Reporter | Jan 29, 2026 | Health | 0 |
Danaher shares fell Wednesday as Wall Street didn’t give the tools and equipment supplier to drugmakers and hospitals credit for beating its rosy profit forecasts from earlier this month. Danaher’s fourth-quarter 2025 revenue rose 4.6% year-over-year to $6.84 billion, beating the LSEG analyst consensus estimate of nearly $6.81 billion. Adjusted earnings per share rose 4.2% to $2.23, also beating the LSEG estimate of $2.15. Why We Own It Danaher is a world-class life sciences and diagnostics company with a track record of finding new growth opportunities and smartly restructuring its business portfolio. Danaher’s products are used to develop and manufacture therapeutics and diagnose diseases. Given the increase in medical spending, the healthcare market is an attractive location in the long term. Competitors: Sartorius and Thermo Fisher Scientific Portfolio Weight: 2.35% Last Purchased: September 25, 2025 Initiated: January 3, 2022 Conclusion: Not only do investors appear to be discounting the announcement numbers at the JPMorgan Healthcare Conference on January 12, they also appear concerned about this year’s outlook. While core guidance for full-year revenue growth was better than expected at the midpoint, segment guidance suggests the lower end of the range is more likely. The high end could come into play if the life sciences end market improves; if more biotech funding leads to more orders and if things get better in China. Since the EPS forecast was only in line with expectations, we weren’t too surprised to see some profit-takers jumping in on a stock whose results were nearing a 52-week high. Aside from the price action, we saw a lot that we liked. Organic sales in the fourth quarter exceeded expectations, as did the company’s overall operating margin. Although cash flow results fell short of expectations, the misses were minor and not nearly enough to cause concern given the positive momentum elsewhere, particularly in bioprocessing, which is key to management’s guidance for the year. Geographically, core sales in developed markets increased low-single-digit, driven by a mid-single-digit increase in Western Europe (North America was flat), while high-growth markets increased mid-single-digit as growth outside China more than offset a low-single-digit decline in China. Bioprocessing, which has been a key weakness for Danaher in recent years due to a lack of customer financing and inventory depletion, continued to improve. Core sales increased high-single-digit due to high-single-digit growth in supplies and mid-single-digit growth in equipment. While the quarter was solid and 2026 looks to be better than 2025, progress was slower than we would have liked. For now, we reiterate our 2 rating and our price target of $240 per share. But as we move forward, we’ll think about whether this is a name we actually want to be in for the rest of 2026. During Wednesday’s morning session, Jim Cramer said he was starting to view Danaher as a “marginal position” in the portfolio, adding that the club had better stocks that he would like to own more of. DHR 1Y Mountain Danaher 1-Year Forecast For the current quarter – the first quarter of fiscal 2026 – management forecasts core revenue growth in the low single digits as end market conditions remain consistent with those of the fourth quarter. Management also expects Danaher’s adjusted operating margin to be 28.5%. By business line, the team expected core revenue growth to be high-single-digit in biotech, flat to low-single-digit decline in life sciences, and low-single-digit decline in diagnostics. For the full year, the team expects core sales growth of 3% to 6%, according to FactSet, better than the 3.6% the Street had been targeting, as management expects continued improvement in end markets throughout the year. Adjusted earnings per share should be between $8.35 and $8.50, right in line with LSEG’s consensus estimate of $8.42. For the year, core biotechnology sales are expected to increase approximately 6% due to high single-digit increases in bioprocessing and continued strength in consumables. Elsewhere, Diagnostics is expected to increase in the low single digits as we move past the peak of headwinds in China (e.g. volume-based sourcing) and Life Sciences is expected to be flat for the year. (Jim Cramer’s Charitable Trust is long DHR. A full list of stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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