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Danaher Corp. (DHR - Analyst Report) hit an all-time high on July 1 with a price of $65.15, beating its previous high of $64.80 attained on June 19, 2013. Total shares traded on that date were 3,743,572 as compared to a 3-month average trade volume of 3,023,530. Danaher shares are currently trading at $63.30 as of closing on July 1, reflecting a year-to-date return of 13.2%.

Shares of this leading designer, manufacturer and supplier of professional, medical, industrial and commercial products and services have been showing steady growth momentum in the last year. During the last 6 months, Danaher has hit 52-week highs 6 times. This shows a growing willingness in the market to own this stock.

However, there are some underlying factors to remain cautious about. Nevertheless, ably supported by a Zacks Rank #3 (Hold), we believe it to be a worthy stock to hold and also look forward to an even higher trend in the near term with the following factors under consideration.

Factors to Consider

Recently in April, Danaher reported strong first quarter 2013 results with earnings of 75 cents a share from continuing operations, representing a 2.5% growth from year-over-year earnings. The company generated total sales of $4.4 billion in the quarter, up 3% year over year. In the first quarter, Danaher gained from the divestment of Apex Tool Group LLC joint venture and other discrete tax benefits.

Danaher reported revenue growth across its five segments. The company was able to achieve organic growth and margin expansion, driven by Danaher Business System (DBS), which also helped in timely cash flow generation. Operating cash flow for the quarter was $636 million. Multiple accretive acquisitions over the past few quarters were mostly responsible for fueling growth for the company.

Moving forward, Danaher is expected to further benefit from multiple acquisitions made during the year. The company is also deriving better-than-expected synergies from the merger of Beckman Coulter. The company is also benefiting from product innovations and go-to-market initiatives. Additionally, Danaher also has a high positive growth expectation for earnings and revenue as per the Zacks Consensus Estimate.

However, the company may face a sluggish growth due to macroeconomic instability (high inflation and increased material cost) prevailing in the European market. The current changes in regulatory authorities of the U.S., which the company is subject to, are likely to have an adverse impact on its overall performance.

The company’s acquisitions are also subject to integration issues. Moreover, management lowered its 2013 EPS guidance range, primarily due to the divesture of Apex Tool Group. This move has also made us wary about the company’s prospects and has blemished an otherwise enterprising performance. 

Other Stocks to Consider

Other sector participants performing well with a better Zacks Rank include Carlisle Companies Inc. (CSL - Snapshot Report), Honeywell International Inc. (HON - Analyst Report), ITT Corporation (ITT - Analyst Report), each having a Zacks Rank #2 (Buy).

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