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Mizuho Downgrades Waters to Neutral on Pharma Concerns

NEW YORK (GenomeWeb News) – Investment firm Mizuho today downgraded Waters, citing "choppiness around the pharmaceutical market" that may cause the company's stock to "languish."

Analyst Peter Lawson downgraded Waters to Neutral from a Buy rating but maintained the $110 price target on the company's shares.

In a research note, he said that a year ago he upgraded Waters based on what he viewed as an improving pharmaceutical end market. Pharma revenues comprise about 55 percent of Waters' total revenues, Lawson said. Recently, though, pharma has softened, and in a Mizuho survey released also today, the pharma sector showed "a marked drop in sentiment, along with decreased expectations in funding and spending."

He noted, in particular, Merck's recent announcement of 8,500 additional layoffs and a targeted $2.5 billion in cost reductions.

Waters likely will see mid-single digit growth in consumables, but Lawson was more cautious on instrument revenue growth, which is needed to lift overall revenue growth to the mid-single digits. On a positive note, he said that the company faces easy year-over-year comparisons for the second half of 2013, and share repurchases could increase the bottom line.

In early Monday trading on the New York Stock Exchange, shares of Waters were down around 1 percent at $103.16.

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