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Milford, Massachusetts-based Waters Corporation (WAT) provides analytical workflow solutions. With a market cap of $20.2 billion, the company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans. WAT distributes its products to a wide range of industries, such as pharmaceuticals, chemicals, and environmental testing.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and Waters perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the diagnostics & research industry. Waters solidifies its analytical instruments market leadership through expertise in liquid chromatography and mass spectrometry, bolstered by significant R&D investments.
Despite its notable strength, WAT slipped 7.5% from its 52-week high of $367.21, achieved on May 15. Over the past three months, WAT stock has gained 17%, outperforming the Nasdaq Composite’s ($NASX) 1.6% gains during the same time frame.
In the longer term, shares of WAT rose 3.2% on a YTD basis and climbed 26.3% over the past 52 weeks, underperforming NASX’s YTD gains of 19.7% and solid 36.1% returns over the last year.
However, WAT has been trading above its 50-day and 200-day moving averages since July end, with slight fluctuations recently, indicating a bullish trend.
WAT has faced challenges in its price performance this year, primarily due to soft demand from pharmaceutical, industrial, and government/academic markets. Additionally, weakening momentum across Asia, the Americas, and Europe, coupled with sluggishness in the Waters and TA segments, presented significant headwinds.
However, on Jul. 31, WAT shares closed up more than 2% after reporting its Q2 results. Its adjusted EPS of $2.63 exceeded Wall Street expectations of $2.55. The company’s revenue was $708.5 million, surpassing Wall Street forecasts of $698 million. For Q3, Waters expects its adjusted EPS to be between $2.60 and $2.70. The company expects full-year adjusted EPS to be between $11.55 and $11.65.
WAT’s rival, Agilent Technologies, Inc. (A), lagged behind the stock with a marginal uptick on a YTD basis and gained 25.5% over the past 52 weeks.
Wall Street analysts are cautious on WAT’s prospects. The stock has a consensus “Hold” rating from the 16 analysts covering it. While WAT currently trades above its mean price target of $336.07, the Street-high price target of $380 suggests an upside potential of 11.9% from its current market prices.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
