Danaher raises annual EPS forecast to $8.57–$8.62 as margins improve
Key Facts
Danaher raised its 2026 adjusted earnings per share forecast to $8.57–$8.62, according to its third-quarter earnings release issued on October 21, as earnings rose and operating margins improved. The company had previously forecast annual earnings of between $8.45 and $8.60 per share. Adjusted diluted earnings per share from continuing operations reached $2.11 in the third quarter, up 11.5% year on year. Compared with the previous quarter, the company had reported adjusted earnings of $1.94 per share in the second quarter, according to that period's earnings release. On a reported basis, net earnings from continuing operations totaled $1,207 million in the third quarter, according to the company's financial statements.
Danaher reported quarterly sales of $6,554 million in the financial statements accompanying its earnings release. Dow Jones reported that sales grew 8.3% to $6.55 billion, slightly below Wall Street's average forecast of $6.56 billion. The net contribution of acquisitions and divestitures to reported sales growth was 6.5 percentage points, according to the company's growth reconciliation table. Core revenue growth including respiratory testing was 3.0% year on year. Excluding those tests, core revenue rose 5.5%, compared with growth of 4.5% in the second quarter, reflecting an acceleration in this measure from the previous period.
By business, the Life Sciences segment posted core growth of 4.5% in the third quarter, according to Danaher's statement. Core growth in the Diagnostics segment excluding respiratory testing reached 7.0% over the same period. Management said on the earnings call that respiratory testing revenue totaled about $350 million and declined year on year, primarily due to lower global infection rates. It added, however, that this revenue slightly exceeded its expectations as customers purchased ahead of the season. In bioprocessing, management described order growth as being in the "mid-teens," led by upstream consumables and purification resins.
The adjusted operating profit margin reached 29% in the third quarter, management said on the earnings call. That represented an improvement of 110 basis points from the same period a year earlier. Management attributed the improvement primarily to strong operational execution, with a limited benefit from tariff refunds. On liquidity, the company generated operating cash flow of $1.9 billion during the quarter, according to the earnings release. Free cash flow, a non-GAAP measure, totaled $1.6 billion over the same period, according to management's call.
The earnings release followed Danaher's announcement on October 14 of a collaboration with Nvidia to integrate artificial intelligence into scientific instruments. According to the collaboration announcement, the technologies involved include edge computing and accelerated analytics. The collaboration also includes real-time inference and foundation model technologies. The companies aim to create a continuous learning cycle in which experiments are used to improve models. In turn, those models help design better experiments, according to Danaher's stated objective for the collaboration.
In its assessment of the results, Barclays described the assumptions underpinning Danaher's guidance as "highly conservative," according to Reuters. It said management needed to reassure investors that the expected growth slowdown reflected caution rather than an actual slowdown in the underlying businesses. Barclays viewed the results as slightly below its expectations, particularly in biotechnology. In the earnings-day session on October 21, Danaher shares closed at $233.86, according to EL7 data. The shares had closed at $224.24 in the October 20 session, ending earnings day above the previous session's close.
For the fourth quarter of 2026, management expects core revenue growth excluding respiratory testing of 4%–5%, according to the earnings call. It expects respiratory testing to subtract about 150 basis points from core growth in the final quarter. It is also targeting an adjusted operating profit margin of approximately 29.5% over the same period. The company is scheduled to pay a quarterly cash dividend of $0.40 per common share on October 30, 2026, to shareholders of record on September 30, 2026, according to the dividend announcement. For 2027, management put forward core growth excluding respiratory testing of 4%–5% as an initial starting point. It plans to provide more detailed quantitative guidance next January.