Danaher (DHR) Stock Soaring on Pall Corp. Acquisition, Split Announcements

NEW YORK (TheStreet) -- Shares of Danaher Corp. (DHR) are higher by 3.01% to $88.59 in mid-morning trading on Wednesday, after the global science and technology innovation company announced its plan to acquire the water filtration systems maker Pall Corp. (PLL) for approximately $13.8 billion

"Pall will provide us a leading business with significant runway for expansion and strengthens our life sciences position in the strategically-attractive, high-growth biopharmaceutical market," Danaher CEO Thomas Joyce Jr. said in a statement announcing the acquisition.

Additionally, today Danaher announced its intention to split into two independent publicly traded companies. The transaction will create a science and technology growth company retaining the Danaher name and including the Pall deal.

The second company will be a diversified industrial growth company ("NewCo").

"This is an exciting day for Danaher and an important step in our company's history. Danaher has always been at its best when all platforms have the ability to invest in the highest impact organic growth opportunities, pursue meaningful acquisitions and use the Danaher Business System to continuously improve performance," Joyce said.

"The pending strategic acquisition of Pall Corporation announced today offers us the unique opportunity to drive greater shareholder value going forward as two stronger and better companies," Joyce added.

Separately, TheStreet Ratings team rates DANAHER CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DANAHER CORP (DHR) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • DHR's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for DANAHER CORP is rather high; currently it is at 58.43%. It has increased from the same quarter the previous year.
  • Net operating cash flow has slightly increased to $523.60 million or 2.42% when compared to the same quarter last year. Despite an increase in cash flow, DANAHER CORP's average is still marginally south of the industry average growth rate of 8.12%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • You can view the full analysis from the report here: DHR Ratings Report

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