Danaher Corp. (DHR) shares are rising in pre-market action after the diversified manufacturer reported a beat on earnings per share and revenue in the third quarter and raised guidance for the full year.
Danaher reported earnings per share of $1.10, besting a FactSet EPS consensus of $1.08, and revenue of $4.85 billion, which was higher than the expected $4.8 billion.
"All in, this is a fantastic result and builds off multiquarter strength for DHR despite a small step backwards in Dental momentum," Evercore ISI analyst Ross Mulken said in his quick take on earnings. "We expect shares to react favorably to the print."
Danaher will look to continue the momentum as it has raised the bar for the full year. (Danaher is a holding of Jim Cramer's Action Alerts PLUS charitable trust.)
According to a company news release, Danaher is increasing its diluted net earnings per share guidance for the year to a range of $3.72 to $3.75 versus previous guidance of $3.64 to $3.71 after the positive quarter.
"We achieved 6.5% core revenue growth, solid operating margin expansion and double-digit adjusted earnings per share growth," CEO Thomas Joyce said. "Four of our five platforms delivered mid-single digit or better core revenue growth, and we believe our investments in innovation and commercial execution are driving market share gains in many of our businesses."
However, analyst Mulken did note that the company's dental program was a drag on earnings.
"Dental was the main negative call-out, with Europe and Japan a touch soft and NA (North America) trends weak but not worsening," he said.
Danaher anticipates spinning off this business segment by the end of 2019, separating the laggard element from its core business.
"We intend to spin-off our dental business into an independent publicly traded company," Joyce said in the company's second-quarter earnings release. "We expect this transaction to be tax-free to Danaher shareholders and to close in the second half of 2019."
Shareholders will look for some recovery in this business before it is detached from the core Danaher brand.
Mulken noted that foreign exchange stung earnings a bit, especially on gross and operating margins, but that interest rate and tax benefits helped alleviate the pain from the exchange pressure.
In light of the results and the guidance, Mulken affirmed his outperform rating. He set a $110 price target for the stock.
At Wednesday's close, shares were hovering just below $105 per share.
All eight analysts publishing research in the last month have issued "buy" ratings for Danaher stock, according to FactSet data.
The company's earnings presentation, to be led by Joyce, was scheduled to begin at 8:00 a.m. ET.