DHR Stock: Leading in the Life Sciences Space

iStock.com/Jackie Niam

Danaher Stock to Continue Gaining From Secular Uptrend

Advanced technologies like artificial intelligence (AI) and cloud computing are changing traditional healthcare. Scientists are working to find solutions at the molecular level, to understand chronic diseases and infections, and to develop new therapies.

Given these changes, there are a few established players that should not be ignored by savvy investors. These stocks could see double-digit gains in the coming years.

Case in point: Danaher Corporation (NYSE:DHR) is a global conglomerate that builds professional, medical, industrial, and commercial products. Its focus on healthcare products and services, in particular, hold immense potential.

The company’s life sciences and diagnostics segments are the major driving forces that could take DHR stock higher in the near future.

Danaher’s life sciences segment offers a variety of research tools that scientists need in order to study the basic building blocks of life, including genes, proteins, and cells. This helps in the understanding of the causes of diseases, and can lead to the development of new therapies and vaccines.

Danaher’s life sciences business is the engine that powers the creation of biopharmaceuticals, cell therapies, and more. With the ongoing industrialization of life sciences, many companies have been embracing emerging technologies. Danaher is making the most of this transformation.

As per research by Frost & Sullivan, the life sciences market will rise to $1.5 trillion globally by 2022. This growth will be driven by factors like healthcare digitization and the democratization of patient data. (Source: “Global Life Sciences Industry Outlook, 2018,” Frost & Sullivan, April 9, 2018.)

The report further says that advanced technologies like AI, big data analytics, and cloud computing are affecting traditional life sciences in a big way, and the industry is expected to witness accelerated growth.

Danaher’s diagnostics segment offers analytical instruments, software, and services that are used by hospitals and laboratories to diagnose diseases and make the best treatment decisions.

Danaher’s well-positioned portfolio serves attractive end-markets, which will continue to grow in the coming years. There are strong secular drivers in these markets and high barriers to entry. The company is in a great position to gain from these developments, which bodes well for DHR stock.

The company has outstanding global brands built on best-in-class technologies, and is a leading player in attractive markets.

Danaher Corporation is consistently creating value through core revenue growth, margin expansion, strong free cash flow, and acquisitions. The company performed very well in 2017, with substantial merger and acquisition activity and solid financial results.

Last year, Danaher acquired 10 businesses for a total of $386.0 million. This year, it announced the acquisition of Integrated DNA Technologies, Inc., a privately-held provider of innovative solutions for genomics applications.

Integrated DNA Technologies works in the areas of next-generation sequencing, synthetic biology, gene editing, and molecular diagnostics. This should further Danaher’s business and push Danaher stock higher in the coming years.

Danaher recently announced the results for its second quarter. The net earnings were $673.8 million, or $0.95 per diluted share, a 20% year-over-year increase.

Revenue increased by 10.5% year-over-year to touch $5.0 billion. It was an outstanding second quarter, with 6.0% core revenue growth, healthy margin expansion, and strong cash flow. (Source: “Danaher Reports Second Quarter 2018 Results,” Danaher Corporation, July 19, 2018.)

The strong results have had a positive impact on Danaher stock. The stock has gained about 24% over the last year, as the following chart shows.

DHR Stock Graph

Chart courtesy of StockCharts.com

Analyst Take

Danaher is a global science and technology innovator that helps its customers solve complex challenges and improve their quality of life. The company has world-class brands and enjoys leadership positions in some of the most attractive industries, including the healthcare, environmental, and industrial sectors.

The company’s strong free cash flow generation helps Danaher enhance its portfolio through strategic mergers and acquisitions. And its exceptional leadership helps deliver positive results.

Given these factors, DHR stock has significant runway ahead. Investors might want to consider this stock for the long term.