Raising Our Capital Allocation Rating and Fair Value Estimate on Danaher

After announcing the planned divestiture of its environmental and applied solutions, or EAS, group in September, we reexamined our views on narrow-moat-rated Danaher, resulting in changes to our capital allocation rating and our fair value estimate. We have raised our capital allocation rating on Danaher to Exemplary, from Standard previously, as we have gained a greater appreciation for the company's investment strategy and execution. The company has created substantial value for shareholders over a very long time period, and further value creation appears possible due to the firm's unique culture and business processes. While our moat rating has not changed, we expect the firm's switching costs to become slightly more durable after divestiture and recognize that in our new fair value estimate ($242 per share, up from $215 previously) by increasing our long-term growth and profitability assumptions that estimate value creation beyond our explicit five-year forecast period.