Fellow science and technology innovator Danaher Corporation (NYSE :DHR), getting ready to announce its first quarter earnings, We’re looking forward to that next report on April 30 th. Revenue-wise, analysts are predicting the company will report $1.64 EPS on about $5.59 billion in revenues. Expectations skyrocket for the January through March quarter. Projected revenues are on pace to hit $10.04 billion, and can you believe earnings per share are estimated at $3.69?
Yet the next earnings report is likely of such concern because it will have an immediate financial impact. Beyond that, it will provide a rare look under the hood of the company’s continuing cost-savings program. This initiative should help them drive earnings upside, and earnings has recently become the key focus for many investors and analysts.
Danaher’s historical conservatism in financial projections has resulted in its outlook looking more attainable than that of many peers. This very conservative approach borrows the company a significant protective cushion. It allows them to better understand the complexities of revenue exposure in our major sectors. At the same time, Danaher is in a very real sense attempting to beat its competitors by increasing its company’s long term dependence on non-NIH/non-academic research funding. This action has sparked investors’ worry about increased volatility in these revenue streams.
The first quarterly conference call with analysts will be the defining moment for the company. Stakeholders will be looking to read between the lines as Danaher looks to describe its success and outlook. On the call, look for talks to center around revenue risk tied to the NIH and university-based research. Investors are looking for some reassurance as to the sustainability of these key revenue sources.
Danaher knows it has major revenue at risk in its exposure to the NIH and academic research sectors. This topic has taken on a whole new timeliness with the ongoing state of the market. This exposure is dangerous, especially at a time when federal funding is more uncertain than ever due to shifting legislative priorities and budget caps.
As the countdown begins before this earnings announcement, all eyes are focused on Danaher’s cost-savings initiative, the Danaher Business System. Beyond just improving service quality, this initiative is likely to improve profitability—which could go a long way towards balancing the threat of external revenue pressures.
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