NEW YORK (TheStreet) -- Shares of Waters Corp. (WAT - Get Report) closed up 0.34% to $118.95 on Wednesday after Cantor Fitzgerald increased the company's price target to $133 from $123, and maintained its "buy" rating.
"We remain bullish on Waters for its industry-leading growth potential, margins and free cash flow generation, leveraging its competitive innovation capabilities to drive growth in its traditional end markets and also emerging opportunities in healthcare/diagnostics," Cantor Fitzgerald analysts said.
Waters revenue growth in its fourth quarter was 3.3% year over year to $583.9 million, versus Cantor's estimate of 3.2% to $583.5 million.
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In the fourth quarter, Waters U.S. division sales were up by 12% year over year, and Waters European division sales grew 10% in constant currency, the firm said.
The downside risks to the firm's "buy" thesis are a slowdown in bio-pharma spending and/or additional consolidations or restructuring, leading to significant reductions in R&D spending, greater-than-expected deterioration in the industrial or academic/government spending globally, and greater-than-anticipated competitive headwinds, analysts noted.
Waters Corp. is a publicly traded laboratory analytical instrument and software company headquartered in Milford, MA.
Separately, TheStreet Ratings team rates WATERS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate WATERS CORP (WAT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- WAT's revenue growth trails the industry average of 23.9%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 4.27, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for WATERS CORP is rather high; currently it is at 59.63%. Regardless of WAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WAT's net profit margin of 25.91% significantly outperformed against the industry.
- You can view the full analysis from the report here: WAT Ratings Report
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