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Here's Why Hold Strategy Is Apt for Danaher (DHR) Stock Now

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Danaher Corporation (DHR - Free Report) is posed to gain from strength in the Life Sciences segment and accretive acquisitions.

However, softness in the Biotechnology segment raises concerns for the company. Decreased demand in the bioprocessing business has been weighing on the performance of the segment. Given the company’s international exposure, forex woes are weighing on its top line.

What’s Aiding DHR?

Business Strength: Stable demand in the academic and applied markets and strong momentum in the genomics consumables business have been supporting Danaher’s Life Sciences segment’s growth. Growth in demand for plasmids and proteins augurs well for the segment. In Life Science, the company has been witnessing positive responses from its new products like IDBS' Polar Insight and Molecular Devices' CellXpress, which help accelerate the drug discovery process and bring new therapies to market faster. It expects investments in innovation and strategic acquisitions to aid the segment’s long-term growth.

Strength in the molecular diagnostics business, driven by increased respiratory and non-respiratory disease tests, is buoying the Diagnostics segment. Also, strong momentum in the clinical diagnostics businesses and solid growth in both instruments and consumables end markets bode well for the segment.

Expansion Efforts: The company believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In December 2023, Danaher acquired Abcam plc, a global supplier of protein consumables, for approximately $5.7 billion. This acquisition expanded the Life Sciences segment. Abcam's track record of innovation, outstanding product quality and breadth of antibody portfolio are expected to help Danaher solve some pertaining healthcare challenges. Acquisitions boosted the company’s total revenues 0.5% in the first quarter.

Rewards to Shareholders: DHR remains committed to rewarding its shareholders handsomely through share buyback programs. In the first three months of 2024, it paid out dividends of $177 million (up 13.2% on a year-over-year basis). In February 2023, the company hiked its dividend by 8% to 27 cents per share.

In light of the above-mentioned factors, we believe, investors should retain DHR stock for now, as suggested by its Zacks Rank #3 (Hold). In the past year, shares of the company have gained 4.7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked companies from the Conglomerates sector are discussed below:

Carlisle Companies Incorporated (CSL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 6.5% in the past 60 days. Shares of Carlisle have gained 72% in the past year.

Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 33.5%.

In the past 60 days, the consensus estimate for GFF’s 2024 earnings has increased 10.6%. The stock has risen 82.8% in the past year.

ITT Inc. (ITT - Free Report) currently carries a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 6.5%.

In the past 60 days, the consensus estimate for ITT’s 2024 earnings has inched up 1%. Shares of ITT have gained 80.1% in the past year.

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