Analyst Note| Julie Utterback, CFA |
At its investor day, narrow-moat Danaher revealed a post-pandemic outlook that roughly matches our long-term expectations, including low-double-digit earnings growth. So while we have tinkered with our short-term assumptions mildly given evolving conditions, our fair value estimate has not changed materially. Admittedly, the near-term outlook for Danaher is highly uncertain, and as a key beneficiary of the COVID-19 health crisis through its diagnostic and vaccine production tools, shares have been riding high on its recent outstanding performance. However, investors should recognize that growth tailwinds will likely turn into headwinds in the next couple of years, and the firm's longer-term goals are much lower than recent growth rates, which is a view we share that contributes to our overvalued take on the stock.