Danaher Corp. (DHR) experienced stock fluctuation over the past year but has seen modest growth in recent months. Danaher’s stock closely followed the S&P 500’s performance, falling by approximately 13% year-to-date as of December 8, 2022. Hedge funds were selling in the third quarter of 2022, and the company landed on the WhaleWisdom Heat Map with a rank of three.
Danaher is a diversified global conglomerate that acquires and operates various manufacturing companies. Its general focus is on manufacturing and marketing medical, industrial, professional, and commercial products. The company operates through three core segments: Life Sciences, Diagnostics, and Environmental & Applied Solutions (EAS). However, Danaher announced in September 2022 that it would spin off its EAS segment to focus more on the firm’s life sciences and diagnostics businesses; Danaher reported that the divesture should be complete by the fourth quarter of 2023.
As Danaher implements its strategic business decisions, it navigates external factors such as market volatility and fluctuating demand. As a global science and technology innovator, Danaher’s growth was initially boosted by the Coronavirus pandemic when their life sciences research tools and diagnostic tests were highly sought after. However, as the pandemic progressed and vaccines became available, life began normalizing, and demand for Danaher’s products leveled off.
Mixed Responses from Hedge Funds and Institutions
Hedge funds sold in the third quarter, and the aggregate 13F shares held decreased to about 118.8 million from 119.3 million, a decrease of approximately 0.4%. Of the hedge funds, 28 created new positions, 146 added to an existing position, 27 exited, and 135 reduced their position. In contrast to hedge funds, institutions increased aggregate holdings by about 0.9% to approximately 562.5 million from 557.7 million.
Earnings Decline Forecasted
An earnings decrease may be inevitable for Danaher as it manages changes to its business segments and rides the rollercoaster of this bear market. Analysts predict earnings per share of $10.41 by December 2023, a decrease from an estimated $10.52 for December 2022. Revenue estimates also indicate a slide, with a projected decline to $30.7 billion by 2023, down from an estimated $30.8 billion in revenue for 2022.
Analysts Pull Price Targets
Analysts have been lowering price targets on the stock. RBC Capital Market’s Conor McNamara recently lowered its price target, influenced by Danaher’s decision to separate the EAS business, which McNamara noted will reduce exposure to economic cyclicality. McNamara decreased the firm’s price target to $293 from $302 while maintaining an Outperform rating on shares. This reduction builds on RBC Capital’s earlier October price target, trimming it to $302 from $318. Barclays analyst Luke Sergott also adjusted the firm’s price target to $277 from $285, maintaining an Overweight rating on Danaher.
Danaher has experienced a challenging year. While Danaher currently has a strong position on the WhaleWisdom Heat Map, it is also notable that analysts’ forecasted earnings through 2023 show no immediate sign of a rebound. Existing stockholders may choose to hold onto shares and regain their investments as the company navigates a bear market. New investors may be cautious but also see long-term growth opportunities from continued demand for Danaher’s diversified product offerings.