Life sciences firm Danaher certainly hasn’t been an easy stock to own this year. A wave of startups going public on Wall Street would go a long way toward changing that. Year-To-Date Performance: Down 0.1% Forward Price Earnings Multiple: 27.8 vs. a five-year average of 28.8 Our Rating: Buy-equivalent 1 Our Price Target: $305 per share DHR YTD Danaher Mountain year-to-date stock performance. ’24 look back This year was about a recovery in the bioprocessing market, which had been under pressure due to built-up inventories at large customers and limited funding for smaller biotech startups buying equipment and products Danaher. Danaher’s other issue was China, where economic growth struggled throughout the year and announced stimulus measures failed to translate into a material increase in orders. That’s really what made this year so frustrating to invest in Danaher. Management executed well and did its best to keep biorefinery order expectations under control with investors, and then once that business started to turn around and the stock gained some momentum, investors refocused their attention on negative economic updates from China. Through it all, we’ve kept Danaher as one of the top 12 holdings in the portfolio. Why? Jim Cramer’s investment rule no. 20: Patience is a virtue and giving up value is a sin. While Danaher may trade at a premium to the S&P 500, we see a lot of value in this stock due to the long-term attractiveness of its life sciences end-markets, including bioprocessing, and the quality of its management team, i which is always looking for new ways to spin off slower growing businesses and refresh the portfolio with multi-year growth in mind. ’25 look ahead In addition to a continued return to bioprocessing, Danaher needs the Chinese economy to pick up steam, which should lead to an increase in orders from customers in the country. Within bioprocessing, large pharmaceutical customers are a part of the business equation. With their inventory levels mostly right-sized, new orders should start to accelerate. The other part of the equation is smaller startups that saw their access to funding take a big hit after the collapse of Silicon Valley Bank in March 2023. While lower interest rates could certainly lead to more funding of the private market, they should also improve the background for initial public offerings. And a better IPO market is really good news for Danaher, as Jim explained during the December Monthly Meeting. “One of the first things biotech companies do when they go public is place big orders with Danaher… That means to me 2025 is going to be a lot better than 2024, even if China doesn’t improve,” Jim said. Don’t get us wrong: Growth in China is definitely desirable and our preferred outcome. But we’re also aware that the sluggish performance this year at least serves to make China’s year-over-year comparisons easier in 2025. As a result, this could shift some focus away from the struggling region as investors star the numbers. of Danaher there, realizing it’s simply out of management’s control, but it needs to be improved eventually. (Jim Cramer’s Charitable Trust is long DHR. See here for a complete list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. INFORMATION ON MESIPERM INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, INCLUDING OUR STATEMENT. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR ACCEPTANCE OF ANY INFORMATION PROVIDED IN CONNECTION WITH INVESTOR CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
A worker uses a machine made by Pall Corp. during a demonstration of the clarification phase of influenza vaccine production during a tour of a Sanofi Pasteur vaccine manufacturing facility in Swiftwater, Pennsylvania.
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Life sciences firm Danaher it certainly hasn’t been an easy stock to own this year. A wave of startups going public on Wall Street would go a long way toward changing that.
