Danaher: Moat Rating Raised to Wide From Narrow on Highly Durable Switching Costs; FVE Boosted

After reviewing the moat ratings of several medical technology firms, we are raising our moat rating on Danaher to wide from narrow previously. This change primarily reflects the long durability of its customer switching costs, which are comparable with many of our wide-moat medical technology firms, including key life science and diagnostic peer Thermo Fisher. Also, while we recognize the risks associated with its acquisition strategy, Danaher's Exemplary Capital Allocation Rating remains based on its exceptional investment strategy and execution, which we think is repeatable and supports our new wide moat rating. With this change, we have increased how long we expect Danaher to remain economically profitable in our valuation model, and that is the primary reason we're increasing our fair value estimate to $285 per share from $268. Shares appear moderately undervalued.