Waters Guides in Line With Our Expectations for 2022; Shares Moderately Rich

Waters turned in fourth-quarter results that led to a mildly stronger bottom line than we were expecting for 2021. The firm's 2022 guidance looks a bit weaker on the top line but right in line with what we expect on the bottom line, and we do not anticipate changing our $250 fair value estimate based on this announcement. At roughly 27 times expected 2022 earnings, we think investors are paying a hefty price tag for a firm that will likely only produce low-double-digit EPS growth annually in the long run. We continue to appreciate the durability of Waters' business model, though, which is reflected in Waters' wide moat rating, and the key durability driver--sales to pharmaceutical firms (59% of fourth-quarter sales)--can lead to decadeslong revenue streams and continues to grow at a decent clip.