Danaher Corp. (DHR)

He bought this in early 2022, though it was mired in an inventory glut. He's stuck with it ebcause he expected it to bounce back. It still has a high PE though. Is down 19% from its August high, but is now a good entry point. An analyst just upgraded it. He expects the healthcare sector to come back next year.

In recent years, DHR has been in the process of transforming itself from an industrial conglomerate into a pure life science and biotech player with a high degree of recurring revenues by divesting legacy industry assets. The company now possesses a solid profile of highly recurring revenue and strong margins, basically a “software-like” business model.

However, weak organic growth has caused the company’s shares to trade largely sideways in recent years. DHR also repurchased shares aggressively in the recent quarter, which the company did not implement for a long time, indicating that management believes shares are undervalued. That being said, DHR is trading at 28.4x Forward P/E with low single-digit revenue growth, which is certainly not that attractive. However, this is not the company’s issue but rather an industry-wide challenge, as similar headwinds also exist with other players like TMO.

Consensus estimates expect DHR to grow its topline by 7% on average over the next few years. We think now could be a good time to average into the position, but maybe not be too aggressively. We would be comfortable starting a position but only adding more when revenue returns to a solid growth trajectory.
Unlock Premium - Try 5i Free

DHR is expensive at 28x forward earnings and it has not been able to fully recover to its all-time highs in 2021 when it traded above $330. DHR has been trading quite choppily since. It is flat year-to-date but up 11% over the last year. We do think that DHR could be a good long-term healthcare play and some of the current risks/fears due to the new US administration may be slightly overstated for healthcare stocks. 
Unlock Premium - Try 5i Free 

Benefits from aging boomer population. Many sales in China, which is on the verge of a recession/depression. As China starts to turn around, DHR will pick up. Defensive healthcare name that he likes for most portfolios.

Great company. Acquires and integrates well. More positive things to come in the healthcare segment, good value there. Wouldn't be the top name as an industrial.

They did well during Covid, but fell off a cliff after the pandemic and as interest rates climbed. But they bought GE's healthcare business 5 years ago and paid that off in 3 years because of their strong cash flows. Eventually, DHR will come back and is starting to. A good entry point now.

Benefitted huge from Covid, but sales from China's sales hit the stock in 2023, but comps will improve in 2024. There remains demand for their products.

They raised their dividend by 12%, a sign of confidence in this great company. It was bad, now great. The lifesciences industry is bottoming now.

In 2020 to 2022 there was an inventory shortage. 2023 was slow with research dollars starting to dry up. 2024 should be better with re-stocking gone, and as a picks and shovels player it will benefit from an aging population.

When he recommended this last summer, he was expecting the glut in bioprocessing equipment to finally end. They reported good results last October, but lowered guidance. In late October, the entire sector seemed to find its footing when interest rates peaked, but was it out of the woods? Last week, DHR reported healthy revenue and earnings beats, but issued very disappointing guidance with organic revenue to be down YOY. Shares slid 5% in pre-markets. Turns out that management was merely being conservative. During the conference call, DHR said that the world ex-China should return to grow later this year as the inventory gut ends. So, but it now.

Cutting edge technology, but valuation very high. Would recommend waiting for shares to fall before buying. Good for long term investors, but better opportunities for investors out there at better prices. 

Transformed from an industrial to healthcare. Life sciences, diagnostics, and biotech. Did well during pandemic. Post-pandemic headwinds, though still generating lots of cash. Attractive company, she owns TMO instead on valuation.

Pure-play life science company. Covid brought a bump in orders, sales, and earnings. Revenue to China has come off. The year's been hard. Future looks much better, as it will continue to be the fulcrum in drug discovery (testing) and manufacturing. Yield is 0.55%.

TMO is a leader in life sciences and diagnostics. He recently added. The entire sector has some over-supply. This is the bottom of the cycle. Lower risk, less upside, more diversified. Historically, good at acquisitions. Good long-term hold, but right now it's all about waiting for funding to come back to the sector.

When the cycle turns, both will do well and will probably outperform.

Historically, it's been a well-run company, making equipment that helps develop new drugs. But that history means nothing. All that matters now is how a company performs in its sector and any disappointing news (in the sector of company) means the stock get punished. Like Danaher.