Assessing Danaher’s Prospects After a 22% Drop and Outlook for 2025

If you have Danaher on your watchlist, you are not alone in wondering whether now is the right moment to act. The past year has been a wild ride for the stock, dragging it down by 22.3% over twelve months and by 9.6% year-to-date. Even with a modest uptick of 1.1% in the last month, Danaher still has not fully shaken concerns about shifting market sentiment and broader volatility in health sciences and industrial technology sectors. Looking further back, the five-year return of 14.8% serves as a reminder of its long-term strength, but recent underperformance has many investors questioning whether Danaher offers real value or if better opportunities are elsewhere.

Beyond the day-to-day headlines, those tracking valuation are noticing that Danaher currently scores just 1 out of 6 on key measures of being undervalued. This means only one aspect of its financials puts it in a clearly undervalued category, while the majority suggest the stock might be fairly priced or even somewhat expensive.

So how can you get a real sense of what Danaher is worth right now? In the next section, I will break down how different valuation approaches line up against Danaher’s current price and what those numbers might mean for you as an investor. At the end, I will share a perspective on valuation that most overlook, one that could make all the difference in understanding Danaher’s real potential.

Danaher scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Danaher Cash Flows

The Discounted Cash Flow (DCF) model estimates what a company is worth today by projecting its future cash flows and discounting them back to their present value, taking into account the time value of money. For Danaher, this analysis starts with its latest twelve months' free cash flow of about $4.9 Billion.

Analysts forecast that Danaher's free cash flow will continue growing, with projections reaching up to $7.3 Billion by 2028. Beyond this point, further increases are estimated by extrapolating long-term growth trends, with projected free cash flow topping $10.4 Billion by 2035.

Based on these projections using a 2 Stage Free Cash Flow to Equity model, Danaher's intrinsic value lands at $249.27 per share. With this number approximately 16.7% above the current market price, the DCF model suggests the stock is 16.7% undervalued compared to current market levels.

In simple terms, the numbers imply that Danaher is trading for less than the calculated value of its future cash flows. This may indicate potential for upside if these cash flow estimates are realized.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Danaher.

Our DCF analysis suggests Danaher is undervalued by 16.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Danaher Price vs Earnings

For profitable companies like Danaher, the Price-to-Earnings (PE) ratio is often the most direct way to assess whether the stock price is justified relative to its current earnings. Investors favor this metric because it captures how much they are paying for each dollar of earnings. This makes it especially relevant for mature, consistently profitable businesses.

What constitutes a "fair" PE ratio depends on several factors. Higher projected earnings growth and lower risk profiles typically warrant higher PE ratios. In contrast, companies facing slower growth or higher risks should trade at lower PEs by comparison. Benchmarks provide helpful context, so let us compare Danaher’s current PE ratio of 43.6x to the Life Sciences industry average of 29.0x and the peer group average of 28.8x.

Simply Wall St introduces a more nuanced valuation tool called the “Fair Ratio.” This tool estimates what Danaher’s PE ratio should be by factoring in earnings growth, profit margins, risk factors, its industry context, and the company’s market cap. For Danaher, the Fair Ratio stands at 29.5x. This forward-looking metric offers a more rounded way to determine valuation than a simple comparison to industry averages or peers, as it adjusts for Danaher’s specific circumstances, including both its growth opportunities and risks.

Comparing Danaher’s current PE of 43.6x to its Fair Ratio of 29.5x suggests the stock trades at a premium, well above what would be considered justified given its fundamentals and outlook.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Danaher Narrative

Earlier, we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is essentially your unique story about a company, how you see its future, what you believe it will achieve, and how that view maps to the key numbers like future revenue, profit margins, and ultimately fair value estimates.

A Narrative connects your perspective with a forecast of Danaher’s financials and translates that back to a specific estimate of what the stock is worth today. Narratives are simple, interactive tools available for free on Simply Wall St’s Community page, where millions of investors refine and discuss their views. With Narratives, you can compare the fair value you (or the community) generate with Danaher’s current share price. This comparison can help you decide if now is the right moment to buy, hold, or sell based on your assumptions, not just the consensus.

These Narratives are not static. They update automatically whenever new earnings data, news, or analyst insights come in, so your thesis stays current. For example, some investors see Danaher’s fair value as high as $310 if they are very bullish on diagnostics and global healthcare, while more cautious users set their view closer to $205. This highlights how different outlooks can lead to actionable decisions.

Do you think there's more to the story for Danaher? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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