Key insights
- Wolfe Research initiated coverage on Waters Corp. (WAT) with an Outperform rating and a $425 price target, implying a 25x 2027 EPS multiple. Despite current high valuations, the firm believes the premium is justified by premium core growth, citing strong Q1 performance post-BD asset acquisition and focus on execution. A DCF analysis also supports a higher valuation than short-term multiples suggest, indicating potential upside for the stock.
Investing.com - Wolfe Research initiated coverage on Waters Corp. (NYSE:WAT) with an Outperform rating and set a price target of $425.00.
The firm’s price target represents 25 times its 2027 earnings per share estimate for the analytical instruments manufacturer. This valuation multiple aligns with Waters’ long-run absolute average and median price-to-earnings ratio.
The target valuation implies a low-20s enterprise value-to-EBITDA multiple, which corresponds to the top quartile observation of Waters’ trailing 15-year history. The company currently trades at an EV/EBITDA of 37.24 and a P/E ratio of 54.57. Wolfe Research notes these inputs represent premiums to core tools peers but views the premium as warranted for premium core growth. An InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value, placing it among the most overvalued stocks in the market.
The firm highlighted that Waters’ first quarter performance following its acquisition of BD assets showed a good start. Wolfe Research states Waters appears focused on execution of the combination.
The firm conducted a discounted cash flow analysis on Waters’ model through 2030 using hurdle and terminal growth rates aligned with inputs used for Thermo Fisher Scientific and Danaher. The resulting net present value exceeded what the short-term multiple-driven approach suggests. Waters is one of 1,400+ US equities covered by comprehensive Pro Research Reports, which transform complex Wall Street data into clear, actionable intelligence for investors.
In other recent news, Waters Corporation reported impressive financial results for the first quarter of 2026, surpassing both earnings and revenue projections. The company achieved an earnings per share (EPS) of $2.70, exceeding analyst estimates of $2.31. Revenue for the quarter reached $1.27 billion, outperforming the expected $1.20 billion. This strong performance was attributed to robust organic growth and the successful integration of the acquired business from Becton, Dickinson and Company. Following these results, Waters raised its full-year guidance, signaling confidence in its ongoing operations.
Additionally, BofA Securities adjusted its price target for Waters, raising it to $370 from $350, while maintaining a Neutral rating. The analyst highlighted the company’s better-than-expected quarter, which contributed to a rally in the broader tools sector. Waters’ ability to execute in its legacy business and improve performance in legacy-BD assets was noted as a key factor in its success. These developments reflect the company’s strong position and positive outlook as it continues to navigate the market.
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