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Danaher Corp DHR

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Morningstar’s Analysis

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Danaher Sets Post-Pandemic View In Line With Our Expectations; Shares Remain Overvalued

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

At its investor day, narrow-moat Danaher revealed a post-pandemic outlook that roughly matches our long-term expectations, including low-double-digit earnings growth. So while we have tinkered with our short-term assumptions mildly given evolving conditions, our fair value estimate has not changed materially. Admittedly, the near-term outlook for Danaher is highly uncertain, and as a key beneficiary of the COVID-19 health crisis through its diagnostic and vaccine production tools, shares have been riding high on its recent outstanding performance. However, investors should recognize that growth tailwinds will likely turn into headwinds in the next couple of years, and the firm's longer-term goals are much lower than recent growth rates, which is a view we share that contributes to our overvalued take on the stock.

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Company Profile

Business Description

In 1984, Danaher's founders transformed a real estate organization into an industrial-focused manufacturing company. Through a series of mergers, acquisitions, and divestitures, including the Fortive separation in 2016, Danaher now focuses primarily on manufacturing scientific instruments and consumables in three segments: life sciences, diagnostics, and environmental and applied solutions. In late 2019, Danaher separated from its dental business through an initial public offering process, and in early 2020, it acquired GE's Biopharma business, now called Cytiva, which added to its life sciences segment.

2200 Pennsylvania Avenue, North West, Suite 800W
Washington, DC, 20037-1701
T +1 202 828-0850
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 69,000