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Waters Corp WAT

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Morningstar’s Analysis

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

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

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.

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Company Profile

Business Description

Water sells liquid chromatography, mass spectrometry, and thermal analysis tools. These analytical instruments provide essential information on various products, such as their molecular structures and physical properties, to help clients enhance the health and well-being of end users. As a percentage of sales, Waters generates 59% from pharmaceutical customers, 30% from industrial clients, and 11% from academic/government institutions.

34 Maple Street
Milford, MA, 01757
T +1 508 478-2000
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 7,400