Veralto: Launching Coverage With $95 Fair Value Estimate and Wide Moat Rating

We are launching coverage of Veralto, which was spun off from Danaher in 2023, with a $95 fair value estimate and a wide moat rating. We expect Veralto to largely follow Danaher’s blueprint, which entails acquiring moatworthy companies with high levels of recurring revenue, improving operating margins through continuous improvement initiatives, and redeploying cash flows into further acquisitions, creating a flywheel effect. We see the name as fairly valued, with shares currently trading in 3-star territory.