Danaher’s days in the portfolio may be numbered. We were disappointed once again as Danaher’s latest acquisition plan failed to inspire Wall Street. Shares of the life sciences giant fell more than 3.5% after the company announced Tuesday that it had agreed to buy medical technology Masimo for $180 per share in cash, or more than $9.6 billion. Masimo shares soared 34% on the news, but were still trading below their expected purchase price. Including debt assumption and cash acquired, Danaher estimates the total enterprise value of the deal to be $9.9 billion. Danaher’s market capitalization at the end of last week was about $150 billion. The company plans to finance the acquisition with cash on hand and borrowings. Danaher said the transaction is expected to increase adjusted diluted net income per common share by 15 to 20 cents in the first full year and approximately 70 cents five years after closing. Danaher said it expects Masimo to deliver high-single-digit core revenue growth over the long term and accelerate the core revenue growth profile of Danaher’s Diagnostics segment. Why is Danaher’s stock price falling, especially given Danaher’s well-regarded M&A track record?The deal with Masimo, a leader in pulse oximetry and other patient monitoring solutions, is expensive. Danaher estimates the transaction multiple at 18x estimated 2027 EBITDA (earnings before interest, taxes, depreciation, and amortization) and expects synergies to reduce the multiple to 15x. In addition, Leerink analysts noted that Masimo’s specialty is medical technology, which is a new field for Danaher and a departure from the typical life science tools and diagnostics areas it normally works with. While Masimo’s products are used in hospital rooms to monitor how patients’ hearts pump oxygen and how their brains function, Danaher has become known for supplying tools and other products used in drug research, development, and manufacturing. We also sell diagnostic equipment used by hospitals, doctors, and laboratories to identify diseases and determine treatments. “(Masimo) is probably a little bit outside of Danaher’s wheelhouse,” Jeff Marks, director of portfolio analysis, said in a Tuesday morning meeting. Danaher has long relied on acquisitions and divestitures as part of its growth and transformation strategy, transforming itself from a diversified industrial conglomerate into a pure-play health care company. Going into 2026, there were rumors that M&A could be back on the table, given that Danaher’s last big deal was its $5.7 billion acquisition of British antibody maker Abcam in late 2023. But Morgan Stanley analysts speculated in a December note to clients that Morgan Stanley may prefer “mid-term tuck-ins rather than more innovative deals.” Jim Cramer had been dissatisfied with Danaher’s performance for some time. He doesn’t keep it a secret. In 2026, the stock price fell by more than 10%, extending the annual losing streak to five consecutive years. We reduced our position in Danaher in late October following a steady post-earnings rally that continued into late January and the stock hitting a multi-year high of nearly $243. However, the decline was rapid, with the stock now trading nearly 7% below its October 2025 sale price of nearly $221. Danaher’s 2026 guidance, released in late January, was a disappointment to a market that had hoped the company and the broader life sciences industry had completely reversed course after several years of post-pandemic weakness. The bottom line, Marks said, is that the club is disappointed with the performance of its share price on Tuesday and this year. “We’ll probably take the next step soon,” Marks added. So be aware that Danaher could be on the way out. There is still no clear timing as to when that will happen. (Jim Cramer’s Charitable Trust is Long DHR. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
