Life sciences and medical diagnostics company Danaher (DHR) reported better-than-expected fourth-quarter earnings and revenue. We view the decline in the stock as both unjustified and an opportunity. Revenue rose nearly 10% to $8.37 billion, according to Refinitiv, which topped estimates of $7.9 billion. Adjusted profit rose 6.7% to $2.87 per share, which topped consensus estimates of $2.54 per share. Excluding the impact of declining COVID test sales — but taking into account revenue from products supporting vaccines and therapeutics — Danaher’s base business saw a core increase of 7.5%. This shows that the company is not much dependent on the post-pandemic sales boom. Bottom Line This was a solid quarter from one of the best-run companies in the world. With little else to nitpick, we attribute Tuesday’s 3% stock decline to a combination of management already announcing results and making big moves in print. Also to blame: First-quarter guidance may have been a little light versus expectations. Given the better-than-expected quarterly results, along with operating margin expansion and strong cash flow generation, we’re inclined to view Tuesday’s selloff as a buying opportunity, according to our 1 rating — especially given that the overall The year guide is also better than expected. DHR 1Y Mountain Danaher (DHR) 1-Year Performance Management said on the post-earnings call that the first quarter is expected to be the low point for their bioprocessing non-Covid core growth as customers look to restock existing inventory Let’s work In other words, the bioprocessing inventory glut that has pressured the life sciences industry in recent months appears to be coming to an end, at which point growth is about to accelerate again. Guidance Management expects overall core revenue growth to be in the low to mid-single-digits on the percentage for the first quarter. After adjusting for the expected “high-single to low-double-digit” impact related to COVID testing, vaccine and therapeutic sales, the team anticipates base business core revenue growth to be in the mid-single-digit percentage range Is. Operating profit margin is expected to be around 30% — ahead of the 27.7% expected. For the full year 2023, management expects overall core revenue growth to be in the low to mid-single digits. After adjusting for the expected “low-double-digit” impact related to COVID testing, vaccine and therapeutic sales, the team is forecasting base business core revenue growth to be in the high-single-digit range. Operating profit margin is expected to be around 31% — ahead of expectations of 27.3%. Although we don’t have an exact comparison because of changes in how management is calculating growth (more details on that below), the first-quarter guide appears to be a bit lighter than what some analysts are modeling. And the likely reason was at least Tuesday’s selling pressure. However, full-year guidance appears to be slightly better than what analysts were expecting. On the call, management said they now anticipate Covid-related vaccine and therapeutics revenue of “approximately $150 million for the full year of 2023, down from approximately $810 million in 2022 and below our previous expectation of $500 million”. ” Reason: Low vaccination and booster rates as well as availability of alternative therapeutics (other than monoclonal antibody-based therapies). Reporting Structure Before digging into the results, we’d like to highlight that management has slightly modified Danaher’s reporting structure. As a result of the significant growth in life sciences in recent years, the team has chosen to separate a portion of the original section into a new section called Biotechnology. To provide an apples-to-apples comparison to Wall Street’s estimates, we combined the new biotechnology and life sciences segments’ sales and operating income in the table below in the Product Segments section. Additionally, beginning with first quarter 2023 results, management is updating its base business core revenue growth definition to exclude the impact of COVID-related testing and the impact of COVID vaccine and therapeutics revenue streams. This is reflected in the guidance section provided above. Earlier, only revenue related to Covid testing was excluded. On the call, management pointed to roughly 10% core revenue growth in both North America and Europe. In China, a surge of infections as the Chinese government with its Zero COVID policy hampered the company’s clinical diagnostics business, as patient and test volumes declined. This dynamic is expected to last through the first quarter before “gradually recovering through the remainder of the year.” Additionally, the team attributed Danaher’s profit margin expansion to “disciplined cost management, implementing productivity measures and price actions, which helped mitigate the impact of inflationary pressures.” [the] business.” Management also noted that while supply chain issues remain, they are seeing “modest improvement in component availability.” single-digit growth in sales related to the quality of the . (These figures are not in the table.) The EAS division is expected to become a separate company later this year. (Jim Cramer’s charitable trust is longer DHR. For a full list of See here. Stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. After Jim sends a trade alert before he buys or sells stocks in his charitable trust’s portfolio. waits 45 minutes. 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In this photo illustration, the Danaher Corporation logo is seen displayed on a smartphone with stock market information for Danaher Corporation in the background.
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Life Sciences & Medical Diagnostics Company Danaher (DHR) reported better-than-expected earnings and revenue in the fourth quarter. We view the decline in the stock as both unjustified and an opportunity.