3. Danaher Corporation (NYSE: DHR)
Number of Hedge Fund Holders: 78
Danaher Corporation (NYSE: DHR) is a Washington-based firm that markets professional, medical, industrial, and commercial products and services. It is ranked third on our list of 10 best diversified stocks to invest in.
On August 4, investment advisory Credit Suisse assumed coverage of Danaher Corporation (NYSE: DHR) stock with an Outperform rating and a price target of $306. Katie Tryhane, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.4 billion in Danaher Corporation (NYSE: DHR), down from 81 in the previous quarter worth $5.7 billion.
In its Q2 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Danaher Corporation (NYSE: DHR) was one of them. Here is what the fund said:
“During the quarter the Fund’s largest holding Danaher made a notable acquisition, spending US$9bn (~5% of its market cap) to buy privately held Aldevron, a leading player in the fast growing field of genomic medicine. Over the years Danaher has built up a unique portfolio of life science and diagnostic assets. Their key life sciences businesses involve providing the tools and services to research, develop and manufacture biotech drugs. For example, they are a key provider to over 400 COVID vaccine and therapeutic projects globally.
Aldevron expands Danaher’s capability into gene therapy. Aldevron is a supplier of key ingredients for the next generation of therapies, namely cell and gene therapy and mRNA vaccines. Aldevron is the leader in these fields and this deal puts Danaher in pole position to participate in the wave of innovation occurring in this space.
The acquisition multiple is high – Danaher are paying US$9bn for what today is a US$500m revenue business but growing 30% a year with 40% operating margins, in our view justifying the high price. Importantly, management can see an investment return in line with recent acquisitions. As a reminder Danaher’s history and skill set is acquiring businesses, it is how the company has been successfully built over 35 years. The shares were up 4% on the news and have gained nearly 20% for the quarter. Most companies would be sold down off the back of an announcement like this but Danaher has a long multidecade track record of successful acquisitions and this fits a similar enough pattern.
The opportunity is to grow Aldevron into a multibillion dollar business given the growth in genomics and RNA innovation that’s occurring and as more of these types of therapeutics become approved. Overall as a key supplier with deep global networks across life sciences and medical research Danaher is very well placed to continue growing with the innovation in biotech and diagnostic markets. It remains an incredibly well run company and a high conviction investment in the Fund.”
