Danaher (DHR), a life sciences and medical diagnostics company, has reported fourth-quarter earnings and earnings that exceeded expectations. We believe that a sharp decline in stock prices is unjustified and represents an opportunity. Earnings on a core basis increased nearly 10% to $8.37 billion, according to Refinitiv, well above his $7.9 billion forecast. Adjusted earnings increased 6.7% to $2.87 a share, beating consensus expectations for him of $2.54 a share. Excluding the impact of lower COVID-19 test sales, Danaher’s base business delivered its core growth of 7.5%, while revenues from products supporting vaccines and therapeutics remained intact. This shows that the company isn’t relying too much on increased sales due to the pandemic. Conclusion This has been a solid quarter for him in one of the world’s best performing companies. Few quibbles, but we attribute Tuesday’s 3% share price drop to a combination of management already pre-announcing results and the stock moving heavily into print. Guidance for the first quarter may be slightly lighter than expected. Given expanding operating margins and strong cash flow generation, along with better-than-expected quarterly results almost across the board, we see Tuesday’s sharp decline as indicated by a 1 rating. tend to see it as an opportunity for The year-round guide also exceeded expectations. DHR 1Y Mountain Danaher (DHR) Full-Year Results Management said on post-earnings conference call that Q1 was at the lowest point of bioprocess non-Covid core growth as customers committed to reusing existing inventories said it was expected to be In other words, the bioprocess overstock that has weighed on the Life Sciences industry in recent months appears to be coming to an end, at which point growth will accelerate again. Guidance Management expects his mid-single-digit overall growth in core earnings in the first quarter. After adjusting for the expected high-single-digit to low-double-digit impact related to COVID-19 tests, vaccines and therapeutics sales, the team reported single-digit base business core revenue growth. We expect it to be in the mid range. Operating margin is expected to be around 30%, above the forecast of 27.7%. Management expects mid-single-digit overall core revenue growth for the full year 2023. After adjusting for the expected “low double-digit” impact related to COVID-19 tests, vaccines and therapeutics sales, the team expects base business core revenue growth to be in the high single-digit range. I am predicting. Operating margin is expected to be around 31%, above the forecast of 27.3%. The way management calculates future growth has changed, so an exact comparison isn’t possible (more on that below), but the Q1 guide is a bit downplaying what some analysts were modeling It looks like you are. At least some of the selling pressure on Tuesday. However, the full-year guidance seems to line up slightly better than analysts had expected. In a call, management said Covid-related vaccines and treatments revenues will “go from about $810 million in 2022 to about $150 million for the full year 2023, down from the previous forecast of $500 million.” ” he said he expected. The reasons for this are declining vaccination and booster rates, and the availability of alternative therapies (other than monoclonal antibody-based therapies). Reporting Structure Before delving into the results, I would like to emphasize that management has made minor changes to Danaher’s reporting structure. As a result of the significant growth of life sciences in recent years, the team chose to separate part of the original segment into a new segment called biotechnology. To provide a complete comparison to Wall Street’s estimates, we have combined sales and operating income for the New Biotech and Life Sciences segment in the Product Segments section table below. In addition, management has updated its definition of base business core revenue growth from its first quarter 2023 results to exclude the impact of Covid-related testing and the impact of Covid vaccines and treatment revenue streams. . This is reflected in the guidance section above. Previously, only revenue related to Covid testing was excluded. In a call, management noted core earnings growth of around 10% in both North America and Europe. In China, the company’s clinical diagnostics business performance was hampered by a surge in infections as the Chinese government scrapped its zero-Covid policy, resulting in lower numbers of patients and tests. The momentum is expected to continue into the first quarter, with a “gradual recovery through the rest of the year.” Additionally, the team believes Danaher’s margin expansion is due to “disciplined cost management, productivity measures and pricing actions implemented to offset the impact of inflationary pressures across the board. [the] Management also noted that “component availability has improved slightly,” although supply chain issues remain. Digit growth in water quality sales. (These numbers are not shown in the table.) The EAS division will become a separate company later this year. (Jim Cramer’s Charitable Trust is a long DHR. Jim Cramer’s CNBC Investing Club As a subscriber, you will receive trade alerts before Jim makes a trade. 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Life sciences and medical diagnostics company Danaher (DHR) reports better-than-expected profit and earnings in the fourth quarter. We believe that a sharp decline in stock prices is unjustified and represents an opportunity.
