Danaher is on the verge of breakout as RBC analysts make a big call

By:
on Jul 21, 2022
  • Danaher stock rose 5% after estimate-beating earnings in the second quarter
  • RBC analysts believe the stock is a buy as the Covid-19 slump is over
  • We think the stock is a strong buy after the quarterly earnings

“Defensive” and “high quality” is what RBC Capital Markets called Danaher Corporation (NYSE:DHR) stock. In a note on Wednesday, RBC said that Danaher’s leverage of only 1.7 times makes the stock attractive. The analysts expressed the satisfaction that Covid-19 concerns are overdone for Danaher. That makes the stock attractive for its defensive characteristics at a very low price. 

RBC’s note came barely a day before the release of Danaher’s second-quarter results. The company reported a per-share earnings of $2.76, an increase from $2.46 in the prior year. Investors expected the earnings to come lower at $2.34 per share. The revenue in the quarter was $7.75 billion, up from $7.22 billion in the prior year. That also beat estimates of $7.29. billion. 

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Danaher again gave a convincing high-single-digit percentage growth in revenue in Q3. The stock reacted by posting an impressive 5% gain on Thursday. With the strong fundamentals, we believe Danaher stock is a strong buy. Let’s look at technical indicators to explore the stock further. 

Danaher is trapped in a descending triangle but keeps support intact

Source – TradingView

Technically, Danaher remains trapped on a descending triangle. However, the stock maintains above key support of $240. The stock is yet to break below the support since the bearish move ended in early May. It has largely consolidated above $240.

With the strong fundamentals, bulls are likely to outwit the bears at the $240 level. That would result in a bullish breakout and set Danaher for higher levels. The stock is a buy.

Summary

Danaher is a strong buy despite remaining on a descending triangle. The stock is eyeing a breakout due to strong fundamentals. Investors should lock value now or can consider buying after a breakout.

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