Credit Suisse is shifting its perspective on shares of Danaher as the company’s bioprocess business comes under pressure. Analyst Dan Leonard downgraded the medical stock to neutral from outperform, citing exposure to bioprocessing inventory reductions that could threaten Danaher’s growth. “Danaher has reduced its near-term growth expectations for its Bioprocess business (~25% of 2022e sales, ex COVID testing) as COVID vaccine demand has fallen and customers reduce inventory,” he wrote in a note to clients Thursday. “We believe inventory burn could continue throughout 2023 before normalizing.” Leonard views the company’s molecular diagnostics business as a pandemic beneficiary longer-term, but suspects the potential expiration of Covid as a public health emergency would do away with some incentives Danaher’s benefitted from. The company may also be overestimating demand for respiratory test sales, he said. “We believe Danaher’s outsized exposure to the diagnostics more generally (~2x peers’) could pressure its growth rate relative to peers’ due to structural maturity and pricing,” he wrote. Given this backdrop, Leonard sees little upside for shares going forward. He trimmed his price target to $300 from $315 a share, with sales and earnings per shares expectations through 2025 coming in below Wall Street’s expectations. The fresh target implies a near 13% jump for the stock after it shed more than 19% in 2022. — CNBC’s Michael Bloom contributed reporting
