Danaher (DHR) is poised for growth reacceleration amid strong bioprocessing demand trends in the broader tools industry, RBC Capital Markets said in a client note emailed Friday.
The brokerage's channel checks consistently point to strong demand trends for bioprocess consumables and expanding equipment funnels. Bioprocessing represents more than 25% of Danaher's revenue and is the "healthiest end market" across the tools industry, according to RBC.
"A sustained bioprocess rebound (supported by incremental equipment growth), the lapping of idiosyncratic headwinds, and progressive end-market improvement put 6% revenue growth within reach for 2027," RBC analyst Dan Leonard said in the note. The expected completion of the company's Masimo (MASI) acquisition in the second half also provides additional upside to the growth profile, the brokerage added.
In February, Danaher agreed to acquire health technology company Masimo in a deal worth about $9.9 billion to boost its diagnostics portfolio. The Masimo acquisition is expected to be accretive to growth and margins, while RBC sees "meaningful white space" for further consolidation in the life sciences segment.
The medical equipment maker's underlying diagnostics business continues to improve, apart from some structural challenges in China, RBC said.
"We see continued runway for Danaher to deploy capital inorganically in life sciences and diagnostics," Leonard said.
Last month, Danaher reported first-quarter adjusted earnings of $2.06 per share, up from $1.88 a year earlier. Revenue increased 3.5% to $5.95 billion. At the time, the company said it expected its full-year adjusted EPS to be in a range of $8.35 to $8.55, reflecting a higher top end versus the previous guidance of $8.50.
RBC has an outperform rating on Danaher's stock with a price target of $200.
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