Danaher's days in the portfolio may be numbered. We were once again disappointed after Danaher's latest acquisition plan failed to inspire Wall Street. Shares of the life sciences giant lost more than 3.5% following Tuesday's announcement that the company agreed to buy medical technology maker Masimo for $180 per share in cash, or more than $9.6 billion. Masimo shares soared 34% on the news, but were still trading below the expected purchase price. Including the assumption of debt and the cash acquired, Danaher puts the total enterprise value of the deal at $9.9 billion. Danaher's market capitalization at the end of last week was approximately $150 billion. It plans to finance the deal with cash on hand and debt. Danaher said the deal is expected to be accretive to adjusted diluted net earnings per common share by 15 to 20 cents in the first full year and about 70 cents five years after closing. Danaher said it expects Masimo to deliver high-single-digit top-line revenue growth over the long term, accelerating the top-line revenue growth profile of Danaher's diagnostics segment. Why are Danaher shares falling, especially considering the company has a highly regarded M&A history? The deal for Masimo, a leader in pulse oximetry and other patient monitoring solutions, is an expensive one. Danaher estimated the transaction's multiple at 18 times estimated 2027 EBITDA (earnings before interest, taxes, depreciation and amortization), hoping to reduce the multiple to 15 times through synergies. Additionally, Leerink analysts noted that Masimo's specialty is medical technology, which is a new vertical for Danaher and a departure from the typical life sciences tools and diagnostics area it typically deals in. While Masimo products are used in hospital rooms to monitor how a patient's heart pumps oxygen and how the brain functions, Danaher has become known for supplying the tools and other products used to research, develop and manufacture medicines. It also sells diagnostic equipment used by hospitals, doctors and laboratories to identify diseases and make treatment decisions. “Maybe [Masimo] “It's slightly out of Danaher's control,” Jeff Marks, director of portfolio analysis, said during Tuesday's morning meeting. Danaher has relied for years on acquisitions and divestitures as part of its growth and transformation strategy, becoming an exclusive healthcare company of a diversified industrial conglomerate. acquired British antibody maker Abcam for $5.7 billion. In a note to clients in December, Morgan Stanley analysts speculated, however, that their preference may be for “medium-term deals rather than more transformative deals.” Jim Cramer has been frustrated with Danaher's performance for a while. He hasn't hidden it. Danaher's position in late October, following a decent post-earnings rally that continued through late January and a multi-year high of nearly $243. The decline has been rapid, however, with the stock nearly 7% below our October 2025 selling price of nearly $221. Danaher's 2026 guidance, released in late January, was a disappointment to a market that expected the company and the science industry Biological studies in general would have made a complete turn towards tracking multiples. slow post-pandemic years The bottom line, according to Marks, is that the Club is disappointed by the stock movements on Tuesday and throughout the year “Will probably look to move on soon,” Marks added. Therefore, be on the lookout for a possible Danaher departure in the future. CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim places 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. ALONG WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION EXISTS OR IS CREATED BY VIRTUE OF THE RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE RESEARCH CLUB, NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
