Danaher Corporation (NYSE:DHR) DHR recently announced the offering of 11,000,000 shares of common stock at a price of $123.00 per share to the public. Also, the company declared pricing of 1,500,000 shares of 4.75% Series A Mandatory Convertible Preferred Stock offering at $1,000 per share to the public.
Notably, a 30-day options will enable underwriters to buy up to an extra 1,100,000 shares of common stock, and up to an extra 150,000 shares of mandatory convertible preferred stock. The offerings are likely to be completed on Mar 1, 2019, depending on fulfilment of customary closing condition.
Danaher expects about $1.31 billion of net proceeds from the common stock offering, while that from the mandatory convertible preferred stock offering are anticipated to be about $1.45 billion. The company intends to use proceeds from these issuances to fund a portion of the acquisition of the BioPharma business.
Our Take
The company is benefiting from solid core revenue growth, improved operating income, benefits from effective implementation of the DBS and commercial initiatives like transformative marketing. The company expects these positives to continue strengthening its bottom line in the quarters ahead. Notably, the company currently expects adjusted earnings for 2019 in the $4.75-$4.85 per share range. This forecast is above $4.52 per share recorded in 2018.
In addition, Danaher is steadily boosting its competency on the back of meaningful inorganic moves. In this regard, recently it agreed to acquire General Electric (NYSE:GE) Company’s BioPharma business. The business will be integrated with the company’s Life Sciences segment and will complement its biologics workflow solutions.
In the past three months, shares of this Zacks Rank #3 (Hold) company have returned 17.1%, outperforming 2.5% rise recorded by the industry.
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However, rising cost of sales has been a major cause of concern. Notably, its cost of sales jumped 7.2% year over year in the fourth quarter. Escalating costs (induced by tariffs and other factors), if unchecked, will continue to hurt the company's margins in the quarters ahead.
Key Picks
Some better-ranked stocks in the same space are Carlisle Companies Incorporated (NYSE:CSL) , United Technologies Corporation (NYSE:UTX) and HC2 Holdings, Inc. (NYSE:HCHC) . While Carlisle sports a Zacks Rank #1 (Strong Buy), United Technologies and HC2 Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Carlisle surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 15.00%.
United Technologies outpaced estimates in each of the preceding four quarters, the average earnings surprise being 14.87%.
HC2 Holdings’ earnings surprise in the last reported quarter was 111.90%.
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Carlisle Companies Incorporated (CSL): Free Stock Analysis Report
United Technologies Corporation (UTX): Free Stock Analysis Report
HC2 Holdings, Inc. (HCHC): Free Stock Analysis Report
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