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Piper Jaffray Initiates Coverage of Danaher, Agilent

NEW YORK (GenomeWeb) – Investment bank Piper Jaffray today initiated coverage of Danaher with a Neutral rating on the firm's stock and Agilent Technologies with an Overweight rating.

In an investment note, analyst William Quirk put a $148 target on Danaher's stock, saying the Washington, DC-based conglomerate's "underlying businesses are well positioned with the Danaher Business System and synergies sources of further growth and improvement."

He additionally noted Danaher's pending $21.4 billion acquisition of GE Biopharma, which he said is "synergistic and attractive based on biopharma's historically high-growth profile and the discounted purchase price" compared to the value of other firms in the biopharma space.

Danaher can also continue to make gains from its core business strengths, Quirk said. For example, in diagnostics Cepheid can continue expanding its market leadership due to its large menu in infectious disease and sexually transmitted disease testing. At the same time, Danaher is moving into high growth end markets and products, including synthetic biology with the acquisition of Integrated DNA Technologies in 2018 and Danaher subsidiary Beckman Coulter Life Sciences' purchase of Labcyte earlier this year.

While Quirk called Danaher a "great company," he said his Neutral rating is based on the company's current valuation. "Going forward, we anticipate growth driven by core business strength as well as acquisitions as the team has a solid track record of integration and improvement with DBS implementation."

In morning trading on the New York Stock Exchange, Danaher's shares were up a fraction of 1 percent at $138.34.

Separately, Quirk targeted Agilent's stock at $83 per share and said that recent softness in Agilent's shares have opened a buying opportunity with anticipated "strong growth from the pharmaceutical and biotech, and environmental and forensics end markets, with recovery in diagnostics and food safety."

He noted new product launches in gas chromatography, and liquid chromatography and mass spectrometry are accelerating growth in healthy end markets for Agilent, and he is modeling strong growth … diagnostics and genomics, "driven by pathology and companion diagnostics[B1] [TF2] .

In the CDx space, Santa Clara, California-based Agilent today announced that the US Food and Drug Administration approved the firm's PD-L1 IHC 22C3 pharmDx assay for expanded use as an aid to identify patients with head and neck squamous cell carcinoma for treatment with Merck's therapy pembrolizumab (Keytruda).

Quirk noted that while there was weakness in Agilent's second quarter, resulting in the company lowering its China revenue expectations for its fiscal year 2019, "we think the overall prospects remain solid long term and await a recovery in the food market."

In morning trading on the NYSE, Agilent's shares rose about 2 percent to $71.45.

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