Waters Beats Q2 Expectations and Raises 2021 Outlook; Shares Still Rich

Wide-moat Waters reported outstanding second-quarter operating results that handily beat FactSet consensus, and management increased its outlook for 2021 above our expectations. As we raise our near-term expectations for recent trends and recognize cash flows generated since our last valuation update, we have increased our fair value estimate significantly to $235, but still well below the Aug. 2 close of $390. At over 35 times forward earnings for a firm likely to produce low-double-digit EPS growth annually in the long run, the shares remain rich, in our view.