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Massachusetts-based Waters Corporation (WAT) is an analytical instrument manufacturer that offers practical and sustainable products for laboratory-dependent organizations. Valued at a market cap of $22.2 billion, the company’s products are used by pharmaceutical, life science, biochemical, industrial, academic, and government customers, working in research and development, quality assurance, and other laboratory applications.
Shares of this life sciences company have outpaced the broader market over the past 52 weeks. WAT has rallied 38.4% over this time frame, while the broader S&P 500 Index ($SPX) has gained 32.1%. However, the stock is up 17.9% on a YTD basis, lagging behind SPX’s 26.2% gains.
Zooming in further, WAT has outperformed the Health Care Select Sector SPDR Fund’s (XLV) 11.5% gain over the past 52 weeks and 7.2% return on a YTD basis.
On Nov. 1, shares of WAT jumped 19.8% after its better-than-expected Q3 earnings release. The company’s adjusted EPS increased 3.2% year-over-year to $2.93 and surpassed the Wall Street estimates of $2.68, while its revenue of $740.3 million climbed 4% from a year ago and exceeded the consensus estimates of $714.3 million. WAT benefited from improved customer spending trends and favorable adoption of its new products. Along with this, the company’s raised full-year 2024 EPS and revenue guidance might have further bolstered investor confidence.
For the current fiscal year, ending in December, analysts expect WAT’s EPS to marginally increase year over year to $11.79. The company’s earnings surprise history is promising. It surpassed the consensus estimates in each of the last four quarters.
However, among the 17 analysts covering the stock, the consensus rating is a “Hold,” which is based on three “Strong Buy,” 13 “Hold,” and one “Strong Sell” rating.
The configuration is more bullish than three months ago, with one analyst suggesting a “Strong Buy.”
On Nov. 4, Barclays maintained an “Underweight” rating on WAT and raised its price target to $360, which indicates a 7.2% downside potential from the current levels.
The Street-high price target of $415 suggests a modest upside potential of 6.9%, and as of writing, the company is trading above its mean price target of $371.87.
