DHR
🏥 Danaher, a major health sector player, focuses on essential diagnostics, biotech, and life sciences technology and consumables, benefiting from the sector’s defensive nature.
🛡️ With diversified global production, including significant US operations, Danaher has minimized direct import tariff risks for its critical, hard-to-substitute products.
💰 Known for strategic acquisitions via its Danaher Business System, the company could capitalize on lower valuations during a crisis to buy competitors at attractive prices.
@adriarivero:
“Then we have another case, which is the case of Danaher. It’s one of the giants within the health sector with a model based on selling technology and essential consumables for medical diagnosis, biotechnology, clinical laboratories, life sciences, etc. This is another company that has done extremely well in the stock market and is now correcting. Where does it produce and sell? Well, it has diversified factories all over the world, although its most important center is in the United States. Does it affect tariffs? In theory, very little, because it has local production in the United States, which minimizes that risk on import tariffs. Its products are so specific and critical that customers cannot easily stop buying them, even if they become more expensive. Furthermore, many of its products are integrated into the workflows of customers like hospitals, laboratories, etc., which makes it even harder to switch them for alternatives. In fact, if you decide to change them, for example, to manufacture a drug, you would have to go through very strict regulation again to get the alternative approved, which means that Danaher has a very good position and good competitive advantages in switching costs. Danaher belongs to a defensive sector, such as health. Between 2007 and 2012, the health sector appreciated by 3% while the S&P 500 fell by 11%. What does this mean? Well, people don’t stop taking care of themselves because the economy is doing poorly. Hospitals and laboratories continue operating even in crises. A large part of its income comes from consumables, that is, products that are used recurrently, yes or yes, in the workflow, like analyses, tests, vials, or tests. Furthermore, its clients’ expenses are operating expenses, or called OPEX, which tend to be maintained in crises, while investment expenses, or CAPEX, can indeed be postponed, and Danaher is more exposed to OPEX, which is very positive. Could it even come out winning? Yes, and here comes the most interesting part. Danaher is an acquisition machine. It has a long history of buying companies in the health sector, integrating them, and improving them with its management system called the Danaher Business System. In an environment of recession or trade crisis, as I said, valuations drop, and companies come under more pressure. Therefore, Danaher could go shopping at a very good price, which makes it a very resilient company against a recession and a trade war.”
Watch the exact part of the video where @adriarivero talks about Danaher Corporation here:
Watch the video on YouTube
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