A Lesser Known MedTech Blue-Chip Stock
9000% more returns than S&P500 in last 25 years Strong long-term growth drivers
Danaher Corporation (DHR) $241.80
NYSE
Sector: Healthcare, Industry: Life sciences tools and services
Key Points
Stable growth since several decades
Strong financial position will continue to drive growth by inorganic route.
Its businesses are not much sensitive to economic downturns.
It serves several important industries where demand will grow for decades to come.
Very strong entry barriers
Introduction
Danaher Corporation, one of the least known companies to the general public, produces products that we touch, see, and interact with every day. They make everything from gas pumps to dentist’s chairs, from microscopes to water purifiers.
Established in 1984, Danaher Corporation is a US based a global science and technology innovator company dedicated to designing, marketing and manufacturing of consumer and industrial products.
It has 20 operating companies and over 81,000 associates worldwide.
They are concentrated on medical, professional, commercial and industrial products and services.
It operates in four segments – Biotechnology, Lifesciences, Diagnostics, and Environmental & Applied Solutions
R&D, sales, manufacturing, administrative, service and distribution facilities of the company are located in over 50 countries worldwide.
Headquartered in Washington DC, the company offers its services in different parts of the world.
Investment Rationale
A temporary blip: Its revenues decreased 7.0% year-over-year due to the impact of lower COVID-19 revenue. This is not indicative of its future growth, it is a temporary issue that has caused its stock price to fall, it is an opportunity. Even in a challenging environment, its performance of its base business grew 6.0% in the first quarter.
Proven success method: It basically acquires and operates manufacturing companies. And not just one or two acquisitions each year. Over the last 30 years, Danaher has completed over 400 acquisitions! Not necessarily shiny brand-name companies, rapidly growing companies, or companies that need turning around. Simply companies in growing markets, without large competitors, where they can use their operating model to provide a competitive advantage.
Ample resources to drive growth: Mergers and acquisitions have been the driving force behind Danaher’s sustained growth for decades--the company has acquired hundreds of businesses since 1984. It has sufficient resources to acquire and proven ability to make them profitable. This will ensure a sustainable growth.
Secular growth drivers: Long-term growth of healthcare sector will be driven by factors such as an aging population, the rise of chronic diseases, and increasing healthcare spending in emerging markets. Covid has increased health awareness, especially in emerging markets.
It owns world’s most innovative science and technology companies: Biotechnology – Cytiva; Life Sciences – Aldevron, Beckman Coulter Life Sciences, IDBS, Integrated DNA Technologies (IDT), Leica Microsystems, Molecular Devices, Pall, Phenomenex, SCIEX; Diagnostics - Beckman Coulter, Cepheid, HemoCue, Leica Biosystems, Mammotome, Radiometer; Environmental & Applied Solutions - ALLTEC/FOBA, Aquatic Informatics, ChemTreat, Esko, Hach, Laetus GmbH, LINX, McCrometer, Pantone, Trojan Technologies, Videojet, X-rite
Algo output interpretation:
The downtrend which had started in January 2021 is expected to be near its end. In immediate term, it may bottom out in 0-1 month.
Useful links –
Danaher Q1 2023 Conference Call Transcript