Danaher Corporation

Danaher managed to exceed the revenue and earnings expectations of Wall Street despite a more dynamic operating environment. Better-than-expected respiratory testing revenue and high single-digit base business core revenue growth in Life Sciences and Diagnostics helped counteract weaker base business demand in bioprocessing. The second quarter had sales of $7.2 billion, a 7% fall in core revenue. High-growth markets experienced low single-digit declines, with China experiencing a loss of almost 10%. Their Diagnostics businesses in China benefited from its ongoing economic growth and hospital patient volumes, while stimulus programs fueled growth in the Life Sciences sector. Additionally, they observed a worsening of China’s ongoing biopharma market downturn. Given these factors, Danaher has begun actively collaborating with its larger clients to assist them in managing their inventory down to normalized levels more quickly. Besides, broad-based strength throughout the Cepheid test portfolio drove another quarter of more than 30% core growth in non-respiratory testing in Molecular Diagnostics. The Xpert Xpress MVP, their recently announced multiplex vaginitis panel, also contributed to mid-teens growth in sexual health testing. We give Danaher Corporation a ‘Hold’ rating with a revised target price.