Is Danaher Corporation (DHR) a Quality Compounder With Long-Term Revenue Growth?

Baron Funds released its “Baron Durable Advantage Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund primarily focuses on investing in securities of large-sized companies. The fund increased 15.6% (Institutional Shares) in the second quarter compared to a 10.9% return for the S&P 500 Index (the Index). The Fund is up 7.5%, year to date, compared to the 6.2% gain for the Index. After two consecutive years of strong market recovery, there was a correction at the end of the first quarter and the early part of the second quarter. But later in the second quarter, the market rebounded meaningfully. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, the Baron Durable Advantage Fund highlighted stocks such as Danaher Corporation (NYSE:DHR). Danaher Corporation (NYSE:DHR) is a science and technology company engaged in the manufacturing and marketing of professional, medical, research, and industrial products and services. The one-month return of Danaher Corporation (NYSE:DHR) was 0.54%, and its shares lost 23.87% of their value over the last 52 weeks. On August 21, 2025, Danaher Corporation (NYSE:DHR) stock closed at $203.90 per share, with a market capitalization of $146.003 billion.

Baron Durable Advantage Fund stated the following regarding Danaher Corporation (NYSE:DHR) in its second quarter 2025 investor letter:

“We also added to our position in Danaher Corporation (NYSE:DHR). Within life sciences, Danaher supplies instruments for lab research, genomics services, and bioproduction tools. For its diagnostics business, Danaher offers instruments to run clinical tests in labs, hospitals, and at the point of care. We are particularly interested in Danaher’s market leading position and broad portfolio within bioprocessing, which we expect to benefit from a wave of biosimilars entering the market after key patents expire. The stock has come under pressure along with the rest of the life science tools space, creating an opportunity for investors with the right time horizon. Multiple headwinds have been shared across the life science sector, but either those headwinds are temporary, or Danaher is better positioned than peers, in our view.

  • First, biotechnology funding has been constrained, and earlier stage, discovery research has been under pressure. That said, Danaher has noted that 75% of their bioprocessing business is in Phase 3 trials or commercial—not as tied to funding-sensitive, speculative areas. Drug production is a highly regulated industry, and Danaher is a trusted brand that is spec’d into production workflows.”

Danaher Corporation (DHR) Is "Fool's Gold," Bemoans Jim Cramer

A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.

Danaher Corporation (NYSE:DHR) is in 27th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 115 hedge fund portfolios held Danaher Corporation (NYSE:DHR) at the end of the second quarter, which was 117 in the previous quarter. While we acknowledge the risk and potential of Danaher Corporation (NYSE: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 time frame. If you are looking for an AI stock that is more promising than Danaher Corporation (NYSE:DHR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Danaher Corporation (NYSE:DHR) and shared the list of best rebound stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.