Danaher shares on Tuesday climbed greater than 6% after the health-care company’s first-quarter results exceeded expectations — and, crucially, its guidance was left mostly intact despite an evolving economic picture. Count us among the many investors respiratory a sigh of relief. Revenue for the three months ended March 31 declined 1% yr over yr to $5.74 billion, topping the consensus estimate of $5.59 billion, in accordance with LSEG. Adjusted earnings per share (EPS) totaled $1.88, exceeding the $1.64 estimate, LSEG data showed. On an annual basis, adjusted EPS fell 2.1%. Bottom line Danaher delivered a reasonably clean earnings report in a messy, tariff-filled moment — a welcome sign regardless of the corporate. But with the best way the once-bankable Danaher has tested our patience and been such a poor-performing stock, Tuesday’s results and outlook mean a bit more. Executives also appear to have a handle on minimizing the earnings’ impact of tariffs. “It’s still got a ways to go,” Jim Cramer said during Tuesday’s Morning Meeting. Nevertheless, the report is “proof of life” at Danaher, he added. Among the many highlights of the quarter: Biotechnology revenue of $1.61 billion topped expectations, up 5.8% yr over yr, or nearly 7% on a core basis, which backs out the impact of foreign-exchange headwinds. Inside that segment is Danaher’s key bioprocessing business — made up of varied services used to fabricate therapeutics reminiscent of monoclonal antibodies. CEO Rainer Blair said on the post-earnings call that bioprocessing is off to a better-than-expected begin to the yr. Orders were up for a seventh consecutive quarter. Accordingly, Blair said Danaher expects bioprocessing revenue to extend by high-single digits in 2025, compared with previous guidance of 6% to 7%. Companywide, executives said they still project core revenue growth to be roughly 3% this yr, with improvements within the bioprocessing outlook offset by barely more subdued expectations for its life sciences business. Life science’s wide-ranging products are used to “study the essential constructing blocks of life,” reminiscent of DNA and proteins, the corporate explained in its securities filings. It also has a filtration component serving more diverse end markets reminiscent of refineries and beverages. For now, no less than, it is evident that executives’ decision to set conservative guidance in January was sensible — and that prudent approach was evident in Danaher’s full-year adjusted EPS outlook of $7.60 to $7.75, which was provided Tuesday for the primary time. That is largely in keeping with the FactSet consensus heading into the report. CFO Matt McGrew made clear on the decision that if the operating environment doesn’t worsen from here, there’s “probably further upside” on earnings in the approaching quarters. Rebuilding credibility with investors after a protracted period of disappointment will take time. But every journey has a primary step. Based on all the things we saw and heard Tuesday, we’re reiterating our buy-equivalent 1 rating, which has been in place since late March, while lowering our price goal to $250 a share from $270. Commentary There’s a whole lot of green on the chart above, and we especially liked to see better-than-expected results for the next metrics: organic growth, adjusted operating income and margin, and all three operating segments. Sure, expectations were low — but at this point, that could be a more desirable setup than what we saw last yr after they were generally too high. Unsurprisingly, tariffs were a giant topic of conversation on Tuesday’s earnings call, and we liked what we heard about Danaher’s ability to navigate the evolving situation. Because the tariffs currently stand, Blair said Danaher expects a roughly $350 million impact for the remainder of the yr — though, he added, the corporate believes tariffs is not going to be this steep by year-end. Nevertheless, Danaher’s plan to offset the tariff hit consists of supply chain adjustments, surcharges, manufacturing footprint changes, and price reductions. Roughly half of the $350 million headwind is tied to products going to China from the U.S., in accordance with McGrew. That’s resulting from Beijing’s steep retaliatory levies in response to the Trump administration’s import duties. Then the opposite half of the headwind is products coming into the U.S. from Europe, which at the moment are subject to Trump’s higher tariffs on European imports. “If things worsen here or higher or the actions that we discover aren’t enough, we could be rather more aggressive if we have to be,” McGrew said. “We have got all those levers to drag. I might say all the things is on the table here in that situation, if that is what we get to.” Danaher also shared encouraging updates on its plan, announced in late February, to chop no less than $150 million in costs this yr. McGrew said Danaher achieved about $50 million of those reductions in the primary quarter, with the remaining $100 million on the right track to essentially be realized evenly throughout the remainder of the yr. The finance chief also said Danaher’s current adjusted EPS guidance only accounts for the prevailing $50 million in cost reductions — once more, a conservative decision. McGrew said he’s confident Danaher will achieve the opposite $100 million in savings, however the management team just desired to see “how things play out, especially from a policy perspective, before we get too constructive.” One other discussion point on the decision was China, which has turn out to be a difficult marketplace for quite a few U.S. health-care corporations. Just like what we heard from fellow portfolio stock Abbott Laboratories last week, Danaher’s China results were negatively impacted by the Chinese government’s national strategy to manage health-care costs. Danaher’s diagnostics business is where China’s strategy — often known as volume-based procurement, or VBP — is most acutely felt. Nevertheless, it was nice to listen to that life sciences demand in China was stable in the primary quarter compared with the prior three-month period, and that a modest profit from the federal government’s stimulus initiatives was realized. On bioprocessing in China, Blair said, “That continues to be stable as they’ve reached the underside there, and we’re beginning to see just a little little bit of life.” Moreover, Blair was asked whether the trade war could lead to Danaher, as an American company, facing blowback in China. He responded by saying, “We do not see China trying to move Western suppliers out of their supply chain.” (Jim Cramer’s Charitable Trust is long DHR. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll 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 trust’s portfolio. If Jim has talked a couple of stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Danaher shares on Tuesday climbed greater than 6% after the health-care company’s first-quarter results exceeded expectations — and, crucially, its guidance was left mostly intact despite an evolving economic picture. Count us among the many investors respiratory a sigh of relief.
