Life sciences company Danaher certainly hasn't been an easy stock to buy this year. A wave of new companies going public on Wall Street would go a long way toward changing that. Year-to-date performance: 0.1% decline Forward price-earnings multiple: 27.8 vs. five-year average of 28.8 Our rating: Equivalent to Buy 1 Our price target: $305 per DHR share YTD mountain Danaher's year-to-date stock performance. Looking back on the 24th This year was about a recovery in the bioprocessing market, which had been under pressure due to high inventories from large customers and limited financing for smaller biotech startups purchasing equipment and products from Danaher . Danaher's other problem was China, where economic growth struggled all year and announced stimulus measures failed to translate into a material rebound in orders. That's really what made this such a frustrating year to invest in Danaher. Management executed well and did everything it could to keep investors' bioprocessing order expectations in check, and then as soon as the business began to turn around and the stock gained some momentum, investors turned their attention back to China's negative economic updates. Throughout all of this, we have kept Danaher as one of the top 12 holdings in the portfolio. Because? Jim Cramer's Investing Rule Number 20: Patience is a virtue and giving up value is a sin. While Danaher may trade at a premium to the S&P 500, we see a lot of value in this stock due to the long-term attractiveness of its life sciences end market, including bioprocessing, and the quality of its management team, which is always looking for new ways to divest slower growing businesses and refresh the portfolio with multi-year growth in mind. '25 looks ahead In addition to a continued rebound in bioprocessing, Danaher needs the Chinese economy to gain momentum, which should lead to an increase in customer orders in the country. Within bioprocessing, large pharmaceutical clients are one part of the business equation. Since its inventory levels are largely undersized, new orders should begin to accelerate. The other part of the equation is smaller startups that saw their access to funding take a big hit following the collapse of Silicon Valley Bank in March 2023. While lower interest rates can certainly lead to more funding from the private market, should also improve the context for initial public offerings. And a better IPO market is actually good news for Danaher, as Jim explained during the December monthly meeting. “One of the first things biotech companies do when they go public is place big orders with Danaher… That means to me that 2025 will be much better than 2024, even if China doesn't improve,” Jim said. Don't get us wrong: growth in China is obviously desirable and our preferred outcome. But we're also aware that this year's slow performance at least serves to facilitate year-over-year comparisons with China in 2025. As a result, that may divert some attention from the struggling region, as investors place an asterisk on Danaher's numbers there, understanding that it is simply out of management's control but should eventually improve. (Jim Cramer's Charitable Trust has a long DHR. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable fund's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY VIRTUE OF THE RECEIPT OF ANY INFORMATION PROVIDED IN RELATION TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
A worker uses a machine manufactured by Pall Corp. during a demonstration of the clarification stage of influenza vaccine production during a tour of the Sanofi Pasteur vaccine production facility in Swiftwater, Pennsylvania.
Stephen Hilger | Bloomberg | fake images
life sciences company Danaher It certainly hasn't been an easy stock to own this year. A wave of new companies going public on Wall Street would go a long way toward changing that.
