Waters Corporation (NYSE:WAT) is one of the Oversold Fundamentally Strong Stocks to Buy Now. On August 4, the company released its financial results for Q2 2025, with sales coming at $771 million, reflecting 9% growth (as reported) and 8% (in constant currency) versus the sales of $709 million for Q2 2024. Waters Corporation (NYSE:WAT)’s results were aided by strong instrument replacement trends–mainly among the large pharma and CDMO customers.
A technician in a lab coat monitoring a chromatography machine.
The company witnessed healthy execution against its commercial growth initiatives, rapid uptake of new products, and contribution from incremental growth vectors like GLP-1s, PFAS, and generics. Therefore, Waters Corporation (NYSE:WAT) raised its full-year sales and earnings guidance. Net of currency translation, the company expects FY 2025 reported sales growth of 5.0% – 7.0%, and non-GAAP EPS of between $12.95 – $13.05.
Waters Corporation (NYSE:WAT)’s combination with BD Biosciences & Diagnostic Solutions ramps up its strategy into multiple high-growth adjacencies, while, at the same time, enhancing the reach of its proven execution model into resilient, high-volume end markets. The company remains well-placed to fuel significant value creation, with synergies creating immediate impact. Baron Funds, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
“We initiated a position in Waters Corporation (NYSE:WAT), a leading provider of analytical instruments and consumables for high volume, regulated applications, including biopharmaceutical quality control, late-stage drug development, food and environmental safety, chemical analysis and materials testing. Waters has a particularly strong market position in biopharmaceutical quality control where its liquid chromatography instruments are used along with its proprietary column chemistry to efficiently separate contaminants from the drug mixture for analysis. This is coupled with their Empower software, which is a one-stop platform compatible for readout across multiple analyzer types, such as mass spectrometry, UV spectroscopy, and multi-angle light scattering. Empower takes all this information and pipes it to regulators with robust data integrity and audit trail. Currently, around 80% of novel drugs filed with regulators use this software, providing a competitive advantage. Moreover, the company’s products are specified in the regulatory approval process, making them very sticky.
Historically, Waters’ revenue has grown in the mid-single digits annually. Going forward, Waters has several idiosyncratic growth drivers which could boost growth above the historic rate: India generics (driven by a larger number of blockbuster drugs going off patent over the next five years), GLP-1 testing (driven by explosive growth in the anti-obesity drug category over the coming decade), biologics (driven by growth in large molecule testing), and PFAS testing (driven by new regulations banning forever chemicals). In addition, management seeks to capture greater price contributions versus historic rates. On top of this, Waters should benefit from a replacement cycle in its instrument business over the next two to four years. Based on these growth drivers, revenue growth could accelerate to the high single digits to low double digits in the coming years. At a recent Investor Day, management established a goal to achieve 400 basis points of operating margin expansion over the next five years, from the company’s industry leading 31% operating margin in 2024 to 35% in 2030. With its strong free cash flow generation, Waters can redeploy capital into M&A and share repurchases to drive solid double-digit annual earnings per share growth.”
Waters Corporation (NYSE:WAT) offers analytical workflow solutions.
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Disclosure: None. This article is originally published at Insider Monkey.
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