July 21 (Reuters) – Danaher raised its annual profit forecast on Tuesday, but shares fell nearly 12% in premarket trading after the life sciences firm trimmed its core revenue growth outlook and reported weaker-than-expected revenue in its biotechnology business.
The results come as conditions are improving for the life sciences tools industry as biotechs and pharmaceutical companies increase spending on research and manufacturing programs after a prolonged post-pandemic slowdown.
However, the outlook is “mixed and not consistent with a re-acceleration narrative,” RBC Capital Markets analysts said.
Danaher’s results also weighed on peers; Agilent Technologies fell 1.7% before the bell, while Thermo Fisher Scientific, Revvity and Illumina declined 2% to 4%.
Danaher lowered the upper end of its core revenue growth outlook range for the year to 4% from 6% to reflect the impact of weaker respiratory testing revenue, while maintaining the lower end at 3%.
Revenue from its biotechnology unit rose 4% to $1.92 billion, below estimates of $1.97 billion, according to data compiled by LSEG.
Danaher said underlying demand for bioprocessing, including equipment and consumables used to make biologic drugs, remained strong, with orders rising by a mid-teens percentage in the quarter, although customer project timing weighed on revenue.
“Assuming demand is not falling off a cliff this badly and this is just a push-out issue, we would think some of the weakness would get bought throughout the day for shares to close down,” Barclays analysts said.
Danaher expects full-year adjusted per-share profit of $8.45 to $8.60, up from $8.35 to $8.55 previously. Analysts were expecting full-year adjusted profit of $8.45 per share.
The company posted second-quarter profit of $1.94 per share, above analysts’ estimates of $1.83 per share. Revenue rose 5.5% to $6.27 billion, topping estimates of $6.10 billion.
Life sciences revenue increased 5.5% to $1.88 billion, above estimates of $1.80 billion.
(Reporting by Sahil Pandey and Mariam Sunny in Bengaluru; Editing by Sahal Muhammed)
