Investing.com -- Goldman Sachs upgraded Danaher Corp (NYSE:DHR) to “Buy” from “Neutral,” citing a more attractive valuation and improving prospects in its bioprocessing segment. Brokerage sees Danaher as a long-term growth compounder poised to benefit from a sector recovery.
Goldman sees the bioprocessing segment as a catalyst for Danaher’s rebound, expecting 7-8% organic growth in 2025. This compares favorably to previous consensus estimates of nearly 12%, which Goldman believed were unrealistic.
The brokerage noted that the inventory destocking cycle, which hurt demand for biologic manufacturing materials, has largely ended, setting the stage for renewed growth.
“While the recovery may take longer to materialize than initially expected, we believe the negative earnings revisions have aligned expectations closer to reality, leaving room for potential upside,” Goldman said.
Danaher’s exposure to monoclonal antibodies (mAbs), which contribute over 75% of its bioprocessing revenue, provides an added growth driver.
Goldman highlighted that Danaher’s EV/EBITDA multiple has de-rated to ~20x, down from ~22x in December 2023, and its valuation premium to the broader tools sector has narrowed from 4x to 2x.
Danaher’s margin protection strategy, aided by recent cost-saving initiatives, is also expected to support profitability in 2025 and 2026.
“We are more comfortable with Danaher’s valuation today, especially as consensus estimates are now more aligned with our growth outlook,” Goldman added.
Goldman sees Danaher outperforming over the next 12 months, with a more reasonable valuation and stronger conviction in a bioprocessing recovery.
However, the firm cautioned that prolonged supply chain constraints or further slowdowns in the biopharma market could pose risks to its thesis.
Goldman had downgraded Danaher in December 2023, highlighting concerns over high valuation and overly optimistic earnings expectations.
Since then, 2025 consensus estimates for revenue growth have fallen 8%, while EPS projections are down 12%, aligning better with the firm’s more cautious outlook.