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Danaher Expands in Genetics with Integrated DNA Technologies


Danaher Corporation DHR inked a definitive agreement to acquire Integrated DNA Technologies (“IDT”) to help expand into the genomics research market. The terms of the transaction were kept under wraps. Danaher’s stock rose 2.1% following the news, indicating that the investors are encouraged by the deal.

The deal is expected to be completed in mid-2018, subject to customary closing conditions and regulatory approvals.

Post-completion, IDT will operate as a stand-alone operating company and brand within Danaher's Life Sciences platform. The platform also includes Beckman Coulter Life Sciences, Pall, Molecular Devices, SCIEX and Leica Microsystems. IDT’s operations will be in sync with the Danaher Business System.

IDT deals in consumables for genomics applications in molecular biology, qPCR, next-generation sequencing (NGS), gene editing, synthetic biology and molecular diagnostics. Primarily, it makes custom DNA and RNA oligonucleotides which are used in genetic analysis and functional genomics. The firm caters to clients in end markets ranging from biopharmaceutical, academic research and agriculture to biotechnology, clinical diagnostics and pharmaceutical development.

IDT has a large client base (more than 100,000 customers worldwide) and it boasts promising gene correction technologies such as CRISPR/Cas9 in its product arsenal. With the deal, Danaher will hold an industry-leading asset to pursue the burgeoning genetic-research and treatment markets.

In fact, per a market research report by MarketsandMarkets, the global oligonucleotide synthesis market is expected to be worth $2.46 billion by 2022, which indicates a CAGR of 10.9% from 2017. The expanding demand for genetic research into treatments for disease conditions, synthetic genetics, developing next-generation sequencing methods and diagnostics are likely the primary drivers for this market.

Danaher believes that the genomic market holds impressive potential and the acquisition of IDT will play a vital role in accelerating customers’ research and time to market, as users develop critical diagnostic tests and therapies. Also, the timing of the deal seems sensible as the demand for IDT’s products is expected to grow dramatically in the near future.

Danaher has successfully repositioned itself as a healthcare company in recent times, gradually broadening its presence in the healthcare and dental markets. These markets are expected to benefit from the rise in aging population and increased spending on healthcare and fitness. Also, lucrative prospects in pharma and clinical end-markets bode well for the company. In six months, this Zacks Rank #3 (Hold) company has gained 19.3% against the industry’s loss of 1.1%.

Additionally, Danaher’s acquisitions have helped it to enhance productivity and drive growth. Also, it anticipates core growth rate to accelerate on account of improving order trends and acquisitions like Cepheid and Phenomenex.

Despite these positives, the slowdown in the company’s academic business in Europe and stunted revenue growth in the Dental business remain concerns for the company. Moreover, softness in industrial markets of China, North America, Latin America and the Middle East has been severely impacting the company’s business.

Stocks to Consider

A few better-ranked stocks in the same space are Potlatch Corporation PCH, Leucadia National Corporation LUK and 3M Company MMM. While Potlatch Corporation sports a Zacks Rank #1 (Strong Buy), Leucadia National and 3M Company carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Potlatch Corporation surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 36.9%.

Leucadia National outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 6.6%.

3M Company also surpassed estimates thrice in the last four quarters, with an average positive earnings surprise of 3.2%.

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