In a report released yesterday, Puneet Souda from Leerink Partners maintained a Hold rating on Waters (WAT – Research Report), with a price target of $335.00.
Geoff Meacham has given his Hold rating due to a combination of factors affecting Waters Corporation’s (WAT) performance and outlook. The fourth quarter of 2023 revealed a slight overperformance in revenue and a strong margin beat, which contributed to a positive reaction in share price. However, the cautious guidance for organic growth in 2024, largely influenced by significant headwinds in China, where approximately 15% of sales are generated, tempers the optimism. Furthermore, while there are potential long-term benefits from pricing power, the integration of Wyatt, and testing tailwinds from GLP-1 and PFAS, the near-term uncertainty around the timing of recovery in instrument sales, particularly in China, leads to a more conservative stance on the stock.
Despite Waters’s positive outlook for a recovery in the second half of 2024, the ongoing challenges in the Chinese market are a cause for concern. There has been a broad-based downturn across multiple sectors in China, with a notable decline in pharmaceutical sales. This regional weakness is expected to persist into the first half of 2024, with a mid-to-high teens decline anticipated for the full year. Although management maintains a long-term positive outlook for China, the current environment suggests caution is warranted. Meacham’s decision to maintain a Market Perform rating reflects the balance between these headwinds and the defensive position of Waters in biopharma downstream quality assurance and quality control.
Souda covers the Healthcare sector, focusing on stocks such as Illumina, Natera, and Hologic. According to TipRanks, Souda has an average return of -7.1% and a 41.18% success rate on recommended stocks.
In another report released today, Stifel Nicolaus also maintained a Hold rating on the stock with a $330.00 price target.
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Waters (WAT) Company Description:
Waters Corp. is a measurement company, which engages in the analytical workflow solutions involving liquid chromatography, mass spectrometry and thermal analysis innovations. It operates through Waters and TA segments. The Waters segment designs, manufactures, distributes and services liquid chromatography and ultra performance liquid chromatography instruments, columns and other chemistry consumables that can be integrated and used along with other analytical instruments. The TA Instruments segment designs, manufactures, distributes and services thermal analysis, rheometry and calorimetry instruments. The company was founded by James Logan Waters in 1958 and is headquartered in Milford, MA.
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