We came across a bullish thesis on Danaher Corporation (DHR) on Substack by Best Anchor Stocks. In this article, we will summarize the bulls’ thesis on DHR. Danaher Corporation (DHR)’s share was trading at $196.71 as of May 1st. DHR’s trailing and forward P/E were 38.12 and 25.64 respectively according to Yahoo Finance.
A laboratory filled with modern equipment, scientists examining the latest biotechnology breakthroughs.
Danaher recently reported a better-than-expected quarter, beating both revenue and earnings estimates, and notably maintained its full-year guidance—a signal of rare visibility in an uncertain macroeconomic environment. While the headline numbers were not eye-popping, the strength of the report lies in what it confirms: Danaher’s bioprocessing business is exiting its prolonged destocking cycle, and the company continues to demonstrate resilient fundamentals despite broader headwinds. Bioprocessing emerged as the standout performer, with consumables posting low double-digit growth, aligning with trends highlighted in Sartorius’s recent earnings. This outperformance led management to raise full-year biotechnology guidance to high single-digit growth, a move that effectively confirms the conservative nature of prior expectations. However, the overall guidance remained unchanged due to a weaker outlook for the lifesciences segment, particularly in academic and university-related sales, which management blamed on U.S. funding uncertainty. Interestingly, they also noted minimal exposure to direct NIH funding and low overall academic revenue dependence, raising questions about the justification for holding the annual guide flat despite strong bioprocessing momentum.
The softness in academia is more meaningful for smaller players like Judges Scientific, which has around 50% exposure to universities, with U.S. revenue contributing about 12% of total sales. That said, management’s positive commentary on China’s stimulus reaching universities provides a possible offset for Judges, even if China represents a smaller portion of its revenue. In diagnostics, Danaher’s Cepheid unit performed in line with expectations, with its non-respiratory business exceeding expectations and respiratory testing normalizing to endemic levels—suggesting that Cepheid’s performance remains robust post-COVID. Importantly, management provided context on tariffs, estimating a $350 million impact but emphasizing their ability to offset it via cost controls, manufacturing shifts, and selective pricing. Years of localized production, especially in China, mitigate broader risks from escalating trade tensions. This operational flexibility, combined with the mission-critical nature of Danaher’s products, makes tariff-related risks manageable. In fact, management’s decision to issue FY2025 non-GAAP EPS guidance—$7.68 at the midpoint—signals confidence despite potential macro disruptions. This estimate appears conservative, with buybacks and operational upside creating a credible path to outperformance.
The buyback activity itself has been noteworthy. Danaher repurchased approximately $1 billion in Q1 2025, reducing its share count by about 4% since its March 2024 peak. Management may be deliberately guiding conservatively to enhance the accretive impact of buybacks, a theory supported by their quick exhaustion of a prior 20 million share repurchase program and initiation of a new one. These repurchases, in the absence of compelling M&A opportunities, reflect strong capital discipline and a shareholder-friendly posture. With market consensus for FY2025 EPS sitting around $7.69, Danaher is well-positioned to beat expectations, even without assuming further buybacks or improving tariffs. Ultimately, while this quarter might not have delivered spectacular growth, it affirmed that the worst is likely over for bioprocessing and that Danaher remains a high-quality, resilient compounder in volatile times. With visibility, strategic capital deployment, and underappreciated operating leverage, Danaher stands out as a steady compounder poised for upside.
Danaher Corporation (DHR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held DHR at the end of the fourth quarter which was 98 in the previous quarter. While we acknowledge the risk and potential of DHR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DHR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.