Life sciences stocks are experiencing a resurgence, and that's good news for Danaher. Connecting the dots with better times ahead for the distressed portfolio name, Jim Cramer believes the industry shift is best illustrated by looking at Agilent Technologies' recovery from a post-Covid rut. Shares are up about 50% from their April lows. The company reported a strong quarter late last month. What has changed? Padraig McDonnell, CEO of Agilent, pointed to a push to bring life sciences manufacturing back to the U.S., among other factors. Life sciences companies create tools and technologies used by pharmaceutical, biotechnology, and medical device companies. But the buck doesn't end with Agilent. The bottom line is that “if Agilent is turning a corner, then I have to believe that arms dealers for the life sciences industry can keep coming back,” Jim Cramer said on “Mad Money” Monday night. “That includes everyone from Danaher to Thermo Fisher to Revvity to Waters.” He added: “It's worth taking a closer look at them all.” It has been a difficult few years for the industry since the rise of the pandemic, when demand for life sciences innovations increased. Danaher and competing companies soared, selling tons of bioprocessing equipment, lab instruments and test tools. In an effort to avoid shortages, customers placed excessive orders, leading to a post-Covid crisis once demand waned. The fallout was harsh for Danaher investors, as the stock struggled since its Covid-era record close of nearly $295 per share in September 2021. More recently, a strong quarter and a guidance assurance in October revived Wall Street's enthusiasm for Danaher. Shares rose 1% to just over $226 each Tuesday. They are up 30% from their April lows; most of those gains have come since late September. Morgan Stanley initiated coverage of Danaher this week with a buy-equivalent rating. “Danaher has refined its business model in recent years to divert exposure toward higher-growth life sciences end markets,” the analysts wrote. They said they are more optimistic about Danaher's setup through 2026 as demand normalizes. Morgan Stanley set a $270 price target for Danaher, representing roughly a 20% upside from Tuesday's close. “It's been really frustrating over the last few years, even though we bought it during the post-Covid disaster. Turns out it was early, as the stock languished for a long time,” Jim said Monday night. But with the Street pointing to 2026 as a breakout year for Danaher and expecting mid-single-digit revenue growth, there's reason to be optimistic. “If they can hit those targets, I bet the stock will continue to go up,” Jim said, adding that in this case the Club could consider trimming the position again. On October 27, we sold 70 shares of Dahaner out of discipline, given the stock's rally and the S&P short-range oscillator's move, at that time, into overbought territory. The Club still owns 400 Danaher shares with a portfolio weighting of almost 2.4%. Our target price is $240. (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.
