## Danaher Beats Q3 Expectations, Bioprocessing Recovery Continues, But Challenges Remain
Danaher Corp (DHR) delivered solid third-quarter results, exceeding analysts’ expectations with a 3% year-over-year increase in sales, reaching $5.79 billion. This growth was fueled by the ongoing recovery in the bioprocessing sector, a key area of focus for the company.
Despite the positive performance, Danaher’s outlook for 2024 remains cautious. The company forecasts a decline in non-GAAP core revenue in the low single digits for the year. This conservative guidance reflects continued weakness in capital expenditures, which are still lagging behind the recovery in other areas.
Key Takeaways from the Q3 Report:
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Bioprocessing Rebound:
The bioprocessing sector continues to rebound, with a high-single-digit increase in sequential orders in the third quarter. This positive trend is reflected in the improved book-to-bill ratio, which rose to 1.0x from 0.80x a year ago.*
Equipment Segment Performance:
While life sciences instruments saw a mid-single-digit decline, this was in line with forecasts and earlier observations. The diagnostics segment, however, performed well, with Cepheid’s respiratory revenue exceeding expectations.*
Guidance for Q4 and Beyond:
Danaher expects mid- to high-single-digit core growth in the Biotechnology segment during the fourth quarter. Analysts are keen to monitor the fourth-quarter exit rate for bioprocessing, potential insights into 2025, the ongoing weakness in capital equipment, and any updates on the Chinese market.Analyst Reactions:
William Blair maintained its ‘Outperform’ rating, highlighting the ongoing recovery in bioprocessing and noting that the results align with expectations. Goldman Sachs, on the other hand, maintained a ‘Neutral’ rating, with a price target of $250.
Market Reaction:
DHR stock closed down 4.01% at $261.18 on Tuesday. This dip likely reflects the cautious 2024 guidance, despite the strong third-quarter results.
Looking Ahead:
Danaher’s third-quarter results provide a mixed picture. While the bioprocessing recovery is encouraging, the persistent weakness in capital expenditures and the cautious outlook for 2024 raise concerns. Investors will be closely watching the company’s performance in the coming quarters to assess the sustainability of the bioprocessing rebound and the potential for a turnaround in capital equipment spending.
