Core Viewpoint - Multiple scientific instrument manufacturers are announcing price adjustments in response to rising costs of raw materials, labor, and supply chain pressures, which are impacting production and operations [4][6][20]. Group 1: Thermo Fisher - Thermo Fisher has stated that due to macroeconomic factors, the costs of raw materials and intermediate processes for chromatography consumables are increasing, leading to production and operational pressures. As a result, they will adjust their product catalog prices starting January 1, 2026 [4][6]. Group 2: Danaher - Abcam - Danaher has completed a review of its entire product line and will implement necessary price adjustments due to rising costs in key areas. The new prices will take effect on January 1, 2026, with variations depending on the product line [8][11]. Group 3: Phenomenex - Phenomenex has decided to adjust market pricing for its products in China due to challenges posed by the global economic environment and supply chain issues. The price adjustments will vary by product line and will be effective from December 22, 2025 [15][16]. Group 4: PerkinElmer - PerkinElmer has indicated that due to multiple factors, including significant increases in core procurement costs due to tariffs, they will adjust prices for consumables starting January 1, 2026. The adjustments will vary by product [20][22]. Group 5: Jena - Jena has announced that due to macroeconomic influences leading to rising production costs, they will adjust prices for both main instruments and consumables starting January 1, 2026 [25]. Group 6: ATAGO - ATAGO has communicated that due to ongoing global economic instability and rapid increases in industry costs, they will raise prices on certain products effective December 1, 2025. Specific details can be obtained from regional sales representatives [29][32].

Core Insights - Zacks Premium provides various tools to enhance stock market investment confidence and knowledge [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [3] Zacks Style Scores Overview - The Zacks Style Scores rate stocks on a scale from A to F based on value, growth, and momentum characteristics [4] - The Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score [4][5][6][7] Value Score - The Value Score identifies attractive and discounted stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow [4] Growth Score - The Growth Score focuses on a company's future prospects by analyzing projected and historical earnings, sales, and cash flow [5] Momentum Score - The Momentum Score helps investors capitalize on price trends by assessing one-week price changes and monthly earnings estimate changes [6] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for stock selection [7] Zacks Rank Integration - The Zacks Rank uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +23.81% since 1988 [8] - The Style Scores complement the Zacks Rank, aiding in the selection of stocks with the highest success probability [9][10] Stock Example: Waters Corp. (WAT) - Waters Corp. is an analytical instrument manufacturer with a Zacks Rank of 3 (Hold) and a VGM Score of B [12] - The company is appealing to growth investors, with a Growth Style Score of B and a projected year-over-year earnings growth of 10.5% for the current fiscal year [13] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate increasing by $0.16 to $13.10 per share [13]

Core Insights - Waters Corporation (WAT) is a leading company in analytical instruments and scientific software, with a market cap of $23.6 billion, serving various industries including pharmaceuticals and life sciences [1][2] Company Performance - WAT is classified as a large-cap stock, reflecting its significant size and influence in the diagnostics and research industry [2] - The company's stock is currently trading 6.5% below its 52-week high of $423.56, but has increased by 35.1% over the past three months, outperforming the Nasdaq Composite's 8.1% rise [3] - Over the past 52 weeks, WAT's stock has gained 1.4%, which is below the Nasdaq's 20.2% increase, and on a year-to-date basis, WAT is up 6.7% compared to Nasdaq's 22.5% return [4] Recent Financial Results - On November 4, WAT's shares surged 6.3% following strong Q3 results that exceeded analyst expectations [5] - The company's net sales for Q3 improved by 8% year-over-year to $800 million, surpassing consensus estimates by 2.6% [5] - Adjusted EPS climbed 16% from the previous year to $3.40, exceeding analyst expectations of $3.21, and WAT raised its fiscal 2025 sales and adjusted EPS guidance [5]

Core Viewpoint - Wolfe Research upgraded Waters Corp. to Outperform from Peerperform, assigning a price target of $480, citing undervaluation relative to the company's growth and free cash flow potential [1] Group 1: Growth Potential - Waters is positioned to outperform due to above-average core growth and upside potential to its pro forma financial targets [2] - The company exhibits strong free cash flow characteristics and is supported by a highly regarded management team [2] Group 2: Valuation Metrics - Based on 2026 pro forma estimates, shares are trading at approximately 17.0x EV/EBITDA and 22.6x P/FCF, which represent discounts of about 10% and 12% respectively compared to peers [2] Group 3: Risks and Management - While there are concerns that integrating BD Life Sciences could dilute Waters' long-term organic growth and reduce premium valuation, the management's track record and diversified end-market exposure justify a higher valuation than current trading levels [3]

Group 1 - Wolfe Research upgraded Waters Corporation (WAT) to Outperform from Peer Perform [2] - The upgrade is based on potential tailwinds from Waters' proposed merger with Becton, Dickinson (BDX) Biosciences & Diagnostic Solutions unit [2] - The merger is expected to enhance Waters' market position and growth prospects in the life sciences tools sector [2]

Core Insights - Waters Corporation is involved in a merger with Becton, Dickinson's biosciences and diagnostics business, which has impacted its stock performance negatively earlier this year [1] - The company specializes in liquid chromatography and mass spectrometry, essential technologies for life sciences [1][2] - Despite recent challenges, Waters Corporation had been performing better than the industry for several years prior to the merger announcement [1] Company Overview - Waters Corporation (NYSE:WAT) provides a range of technologies including liquid chromatography, mass spectrometry, thermal analysis, rheometry, and calorimetry systems [2] - These technologies are utilized for research, product development, quality checks, and specialized testing [2]

Core Viewpoint - Morgan Stanley initiated coverage of Waters Corp. with an Equalweight rating and a $423 price target, highlighting the company's strong operational performance but noting near-term uncertainties due to its latest acquisition [1] Company Performance - Waters Corp. has effectively executed its transformation priorities over the past five years, enhancing commercial capabilities and expanding into higher-growth areas [2] - Large molecule chemistry now accounts for 50% of bioseparation revenues, with ongoing advancements in LC-MS for clinical diagnostics and battery testing, both identified as high-single-digit growth drivers [2] Acquisition and Integration Risks - The planned acquisition of Becton Dickinson's Biosciences and Diagnostics businesses introduces integration risks due to the size and complexity of the assets, which are significantly larger and more diverse than previous acquisitions [3] - Successful integration will depend on Waters' ability to apply its disciplined operating model while managing the capital-spending pressures and recovery timelines of the acquired units [3] Near-term Outlook - Despite a favorable view of Waters' core business, the integration challenges associated with the acquisition limit near-term visibility, justifying the Equalweight stance [4]

Core Insights - Waters Corporation is a leading analytical instruments and software company with a market cap of $22.4 billion, specializing in high-performance liquid chromatography, mass spectrometry, and laboratory informatics [1] Performance Overview - Over the past year, Waters shares have increased by 5.8%, underperforming the S&P 500 Index, which has risen by nearly 10.5% [2] - Year-to-date in 2025, WAT stock is up 2.1%, while the S&P 500 has seen an 11.2% rise [2] Sector Comparison - Waters has also underperformed compared to the Health Care Select Sector SPDR Fund, which gained 6% over the past year and 10.1% year-to-date [3] Recent Financial Performance - On November 4, Waters reported stronger-than-expected third-quarter results, with revenue of $800 million, an 8% year-over-year increase, driven by demand in pharmaceuticals and growth in recurring revenue streams [4] - Adjusted EPS surged to $3.40, reflecting a 16% increase from the previous year, aided by improved margins and accelerated instrument replacement cycles [4] Growth Drivers - Strength in LC-MS systems, double-digit growth in chemistry, and an 11% boost in pharmaceutical end-markets contributed to the company's momentum [5] - Waters raised its full-year sales and earnings guidance, indicating confidence in demand outlook [5] - Analysts expect WAT's EPS to grow by 10.5% to $13.10 on a diluted basis for the current fiscal year ending in December [5] Analyst Sentiment - Among 15 analysts covering WAT stock, the consensus rating is a "Moderate Buy," consisting of five "Strong Buy" ratings and ten "Holds" [6] - Rothschild & Co initiated coverage on Waters with a "Buy" rating and set a price target of $390, drawing renewed attention to the stock [7]

Core Insights - The replacement cycle for instruments has been ongoing for about a year, with significant momentum observed in orders outpacing revenues [1][2] - The growth rate for LC-MS instruments remains in the high single-digit range, driven by the replacement cycle and other factors [2][3] - The industry is still in the early stages of the replacement cycle, with many customer segments yet to begin replacing their instruments [3] Group 1 - The instrument replacement cycle is expected to continue, indicating a positive trend for future growth [3] - Current growth for LC-MS instruments is characterized by a low single-digit CAGR over the past six years, suggesting room for improvement [3] - The sales funnel for instruments is strong, indicating good future demand [3]

Summary of Conference Call Company and Industry - **Company**: Waters Corporation - **Industry**: Life Sciences and Analytical Instruments Key Points and Arguments Replacement Cycle and Growth Drivers - The replacement cycle for instruments, particularly LCMS, began about a year ago and is expected to continue for several more years, with current growth rates in the high single digits [2][4] - The growth drivers for LCMS include: 1. Instrument replacement cycle, which is still ongoing [2] 2. Idiosyncratic growth drivers such as GLP-1 testing, which has seen revenues double, and PFAS testing, which has 30% order growth [3] 3. Development of new products that meet significant unmet needs in the market [3] Performance in Different Segments - Chemistry segment grew by 13% in the third quarter, significantly above the pre-COVID run rate of 6%-7% [5] - The growth in chemistry is attributed to investments in bioseparations and innovations in product offerings, particularly for biologics [6][7] - The pharma segment experienced double-digit growth driven by the replacement cycle and idiosyncratic growth drivers, particularly in the U.S. and Europe [10][11] Regional Insights - In China, growth is driven by CDMOs supporting the local biotech industry, with a significant share of global in-licensing coming from China [11] - India is experiencing high teens growth driven by generics, while branded generics in China are still declining [11] Innovation and New Products - The CDMS opportunity is highlighted as a significant unmet need in the market, with potential to capture a large share of the $350 million annual sales currently dominated by existing techniques [16][17] - New product launches include the FACS DiVa S8 flow cytometer and the FXI incubator for microbiology, both expected to drive significant growth [22][23] Software and Commercial Model Changes - The Empower software business is a critical part of Waters' portfolio, with plans to transition to a subscription model to enhance revenue [30][31] - The Empower system is used for 80% of QAQC data submissions for drugs filed to regulatory bodies, indicating its importance in the industry [30] Market Dynamics and Future Outlook - The overall market setup is positive, with continued growth expected from the replacement cycle, new product introductions, and idiosyncratic growth drivers [38] - The company anticipates that the growth rate in chemistry will stabilize in the high single digits to low double digits over time [7] Additional Insights - The company is focusing on integration planning post-acquisition, with positive surprises in microbiology workflow improvements and potential market entry strategies [26] - The pricing strategy for large molecules is expected to be stickier and more significant compared to small molecules, enhancing revenue opportunities [9] Other Important Content - The company is actively working on enhancing its product offerings and market strategies to capture unmet needs and drive sustainable growth [17][38] - There is a focus on customer adoption and integration of new technologies, which is crucial for maintaining competitive advantage in the market [17][31]