17 Jan

What Factors Could Drive Danaher Stock in 2017?

WRITTEN BY Sheldon Krieger

Series overview

Danaher Corporation (DHR) will announce its 4Q16 earning results before the market opens on January 31, 2017.

In this series, we’ll look at analysts’ expectations for DHR’s 4Q16 earnings. We’ll also look at the factors that led analysts to arrive at these expectations, along with the company’s updated earnings guidance for 2016 and the key indicators to consider in its upcoming earnings release.

What Factors Could Drive Danaher Stock in 2017?

Danaher’s 2016 stock performance

Although Danaher started 2016 on a weak note, it outperformed the broader market by a small margin. Much of its gains were seen after 1Q16. Improved gross margins across the majority of its revenue-generating segments led DHR to beat analysts’ EPS (earning per share) expectations in the last three quarters. As a result, DHR rose nearly 12% in 2016.

The company’s peers 3M Company (MMM) and Varian Medical Systems (VAR) rose 22% and 14%, respectively, in the period. Industry major Roche Holding (RHHBY) fell ~17%.

Notably, the iShares Dow Jones US Health Care ETF (IHF), which tracks the performance of the US healthcare providers sector, remained nearly unchanged in 2016.

Driving factors in 2017

New product launches and synergies from its strategic acquisitions such as Cepheid and Phenomenex could drive Danaher’s top line growth in 2017. In addition, consumer demand for improved and premium healthcare facilities and the expansion of privatized healthcare in DHR’s major international market, China, could aid its growth.

Next, let’s discuss how analysts are rating Danaher.

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