Life sciences company Danaher has definitely not been a straightforward stock to own this yr. A wave of startups going public on Wall Street would go a good distance toward changing that. Year-to-date performance: down 0.1%. Forward price-to-earnings ratio: 27.8 versus a five-year average of 28.8. Our Rating: Buy Equivalent 1. Our price goal: $305 per share. DHR YTD Mountain Danaher's year-to-date stock performance. '24 Review This yr was marked by a recovery within the bioprocessing market, which had been under pressure resulting from increased inventory levels amongst major customers and limited financing for smaller biotech startups purchasing equipment and products from Danaher. Another problem for Danaher was China, where economic growth struggled all year long and announced stimulus measures didn’t end in a major increase in orders. That's really what made investing in Danaher such a frustrating yr. Management has done a great job of doing its best to align bioprocessing order expectations with investors. Once business began to turn around and the stock gained some momentum, investors turned their attention back to the negative economic data from China. Despite all this, we’ve retained Danaher as certainly one of twelve core investments within the portfolio. Why? Jim Cramer's Investing Rule #20: Patience is a virtue and abandonment of values is a sin. While Danaher could also be trading at a premium in comparison with the S&P 500, we see quite a lot of value on this stock resulting from the longer-term attractiveness of the life science end market, including bioprocessing, and the standard of its management team, which we’re at all times searching for latest ways to do away with slower-growing businesses and refresh the portfolio with a watch on multi-year growth. '25 Looking Ahead In addition to a continued recovery in bioprocessing, Danaher needs a recovery within the Chinese economy, which should result in a rise in orders from customers within the country. In bioprocessing, large pharmaceutical customers are a part of the business equation. With their inventories largely at the appropriate size, latest orders should speed up. The other a part of the equation is smaller startups, whose access to funding was severely impacted following the collapse of Silicon Valley Bank in March 2023. While lower rates of interest can definitely result in more private market financing, they must also improve the environment for IPOs. And a greater IPO market is basically excellent news for Danaher, as Jim explained throughout the monthly meeting in December. “One of the first things biotech companies do when they go public is place big orders with Danaher… That means to me that 2025 will be much better than 2024, even if China is no better.” said Jim. Don't get us improper: growth in China is clearly desirable and our preferred consequence. But we also recognize that this yr's sluggish performance will not less than help make year-on-year comparisons with China easier in 2025. This could subsequently have the effect of diverting attention away from the troubled region as investors understandably put an asterisk on Danaher's numbers there that it is solely out of management's control but should improve sooner or later. (Jim Cramer's Charitable Trust is long DHR. A full list of stocks will be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation's portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Life sciences company Danaher definitely wasn't a straightforward stock to purchase this yr. A wave of startups going public on Wall Street would go a good distance toward changing that.
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