Danaher (DHR) stock is making inroads to retaking its 50-day line Tuesday after the medical powerhouse delivered a "solid" first-quarter report and maintained its outlook for the year.
The S&P 500 company provides tools and diagnostics equipment for the life sciences segment. During the first quarter, Danaher earned $1.88 per share on $5.74 billion in sales. Earnings fell 2% year over year, but topped forecasts for $1.63. Sales were roughly flat, but beat the average view of analysts polled by FactSet for $5.57 billion.
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Notably, Danaher said it can offset the current tariffs by footprint changes, supply chain adjustments, surcharges and other cost actions, RBC Capital Markets analyst Conor McNamara said in a client note. He described Danaher's report as "solid."
Danaher also maintained its outlook for the year, continuing to project 3% sales growth. For the first time, the company guided to adjusted earnings of $7.60 to $7.75 per share. The midpoint of Danaher's guidance is just ahead of analysts' forecast for $7.66.
"We believe the strong quarter and maintained guidance — along with commentary on tariffs — are a pleasant surprise," McNamara said. "But we are also concerned that DHR didn't factor in a step-down in the macro environment from Q1."
Still, Danaher stock advanced 3.7%, closing at 191.87.
Danaher Stock: Bioprocessing Tops Diagnostics, Life Sciences
Importantly, Danaher's biotech segment — which includes bioprocessing — grew 7% on a core basis. The bioprocessing segment helps customers make biological systems, including biologic drugs.
Evercore ISI analyst Vijay Kumar noted Danaher slightly raised its guidance for the biotech segment. Sales are expected to climb 7% this year, up from Danaher's previous view for 6% to 7%. This should help allay concerns about a slowdown in pharma spending due to potential tariffs.
"DHR should hold up better vs peers as majority of their pharma exposure is volume driven and should be immune," he said in a client note.
Meanwhile, the life sciences and diagnostics segments fell 4% and 1.5%, respectively, on a core basis. But Kumar noted both segments topped analysts' expectations. The company expects flat life sciences sales and flat to low single-digit growth for the diagnostics business.
"Despite the uncertain macro backdrop, Danaher delivered a solid first-quarter print including a healthy top-line beat driven by outperformance in bioprocessing (second consecutive quarter of high-single-digit growth with sequential order growth and book-to-bill ratio above 1.0x) that more than offset the anticipated weakness in life sciences (now expected to have a more modest outlook for the year)," William Blair analyst Matt Larew said in a report.
He reiterated his outperform rating on Danaher stock.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
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