Goldman upgrades this conglomerate, sees 20% upside

Danaher shares are finally trading at a more attractive valuation, according to Goldman Sachs. Analyst Matthew Sykes upgraded Danaher to buy from neutral and set a 12-month price target of $260, which implies 23.7% potential upside. Shares of the global conglomerate, known for its biotech, diagnostics, and life sciences businesses, are down 8.4% year to date and more than 16.5% over the past year. The comedown in 2025 consensus earnings expectations on Danaher, particularly in its biotech segment, have led to more realistic growth expectations for the company, Sykes said. “With conviction in a bioprocessing recovery and long term growth, a lower bar to maintain a beat and raise dynamic, and a more reasonable valuation premium vs the sector, we believe DHR has the potential to outperform our broader coverage over the next 12 months,” Sykes said in a Friday note to clients. “Currently, we see expectations as appropriately measured for the current environment and the ’25 EV/EBITDA multiple has de-rated 3 turns from peak levels offering a more attractive entry point into a stock we see as a long-term compounder undergoing short term/cyclical issues,” he added, noting the stock’s significant underperformance this year against the S & P 500 and the Health Care Select Sector SPDR (XLV) ETF . DHR 1Y mountain Danaher stock. Sykes said Danaher’s initial cost savings announced in the company’s most recent 10-K filing could lead to potentially greater margins in 2025 and 2026. Another catalyst for the stock could be a comeback in Danaher’s biotech segment, which has seen consensus organic growth estimates drop by 42%, according to Sykes. More broadly, Goldman believes that the bioprocessing end market itself is set for a recovery after facing supply chain constraints and inventory issues. That should benefit tools players such as Danaher, Sykes said. “We see the Biotech segment as driving a recovery in the shares over the next 12 months fully offsetting pressure in China and the de minimis exposure to the Academic & Government segment as insulating them from the challenges in this end market,” he wrote in the note.