Danaher (DHR) Up 6.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Danaher (DHR). Shares have added about 6.8% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Danaher due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Danaher Corporation before we dive into how investors and analysts have reacted as of late.

Danaher Q2 Earnings Beat Estimates, Life Sciences Sales Up Y/Y

Danaher second-quarter 2025 adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.64. The bottom line increased 4.7% year over year.

Danaher reported net sales of $5.94 billion, which beat the consensus estimate of $5.84 billion. The metric increased 3.5% year over year.

Its core sales increased 1.5% year over year in the quarter. Foreign-currency translations had a positive impact of 2%.

Segmental Discussion

Revenues from the Life Sciences segment totaled $1.78 billion, up 0.5% year over year. We expected the segment’s revenues to be $1.71 billion. However, core sales decreased 2.5% year over year. Acquisitions/divestitures had a positive impact of 1.5% on segmental sales while foreign-currency translations also had a positive impact of 1.5%. Operating loss was $239 million against operating profit of $233 million in the year-ago quarter. 

Revenues from the Diagnostics segment totaled $2.31 billion, up 2% year over year. Our estimate for revenues was $2.29 billion. Core sales increased 2% year over year, while foreign currency had a positive impact of 0.5% on sales. However, acquisitions/divestitures impacted sales by 0.5%. Operating profit was $554 million, down 0.4% on a year-over-year basis.

Revenues from the Biotechnology segment totaled $1.85 billion, up 8% year over year. Our estimate was $1.83 billion. Core sales increased 6% year over year while foreign-currency translations had a positive impact of 2%. Operating profit was $531 million, up 14.9% year over year.

Danaher’s Margin Profile

In the second quarter, Danaher’s cost of sales increased 4.2% year over year to $2.41 billion. Gross profit of $3.52 billion increased 2.8% year over year. The gross margin was 59.3% compared with 59.7% in the year-ago quarter.

Selling, general and administrative expenses of $2.36 billion recorded an increase of 26.3% on a year-over-year basis. Research and development expenses were $403 million, up 3.1% year over year.

Danaher’s operating profit decreased 34.9% year over year to $760 million. Operating margin contracted to 12.8% from 20.3% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the second quarter, it had cash and equivalents of $2.96 billion compared with $2.1 billion at 2024-end. Long-term debt was $16.9 billion at the end of the quarter compared with $15.5 billion at the end of December 2024.

Danaher generated net cash of $2.64 billion from operating activities in the first six months of 2025 compared with $3.16 billion in the previous year’s comparable period. Capital expenditures totaled $493 million in the same period, down 14.7% year over year. Adjusted free cash flow decreased 16.5% year over year to $2.15 billion in the first six months of 2025.

In the same period, it paid out dividends of $423 million, up 12.2% on a year-over-year basis.

Danaher’s Outlook

For the third quarter, Danaher expects adjusted core sales from continuing operations to increase in the low single digits on a year-over-year basis.

The metric is anticipated to increase approximately 3% on a year-over-year basis in 2025. The company expects adjusted earnings to be $7.70-$7.80 per share compared with $7.60-$7.75 expected earlier.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Danaher has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Danaher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Danaher belongs to the Zacks Medical Services industry. Another stock from the same industry, Elevance Health (ELV), has gained 4.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2025.

Elevance Health reported revenues of $49.42 billion in the last reported quarter, representing a year-over-year change of +14.3%. EPS of $8.84 for the same period compares with $10.12 a year ago.

Elevance Health is expected to post earnings of $5.25 per share for the current quarter, representing a year-over-year change of -37.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -12%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Elevance Health. Also, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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