Danaher raised its 2026 earnings range to $8.57 to $8.62 a share, and its core growth excluding respiratory testing accelerated by about a point. Thermo Fisher beat on earnings and revenue. Both shares reached the afternoon above Tuesday's close.
Two of the largest companies selling equipment to laboratories reported on the same morning, and both traded down before trading up.
Danaher reported third-quarter adjusted earnings of $2.11 a share, about 11.5% higher than a year earlier and above the $1.92 FMP consensus. Core revenue rose 3.0%, and 5.5% excluding respiratory testing, an acceleration of about 100 basis points from the second quarter. The adjusted operating margin was 29.0%. Revenue was about $6.55 billion, in line with forecasts.
Thermo Fisher reported revenue of $12.14 billion, up 9%, with 6% organic growth and 3% from acquisitions. Adjusted earnings were $6.68 a share, up 15% and above the $6.40 FMP consensus. Its adjusted operating margin was 24.5%, up from 23.3%. The company raised its 2026 outlook, with revenue now $47.7 billion to $48.2 billion, adjusted earnings $25.13 to $25.43 a share and organic growth of 4%.
The respiratory drag
Danaher's headline beat was about 10%. Its headline growth was only 3%. The gap is respiratory testing, the demand for which has been fading. Danaher now expects respiratory revenue of about $1.5 billion for the full year, down about 20% from about $1.9 billion and $100 million below its prior forecast of about $1.6 billion. Excluding it, the company expects core growth of 4% to 5% in the fourth quarter, and its bioprocessing outlook is unchanged at mid-single-digit growth.
The company raised its full-year adjusted earnings range to $8.57 to $8.62 from $8.45 to $8.60, a midpoint increase of 7 cents.
Stocks that reversed
Both stocks opened lower and reversed. Thermo Fisher traded as low as $662.78, down 3.6% from Tuesday's close of $687.37, and rose to $705.785, a 52-week high, and was at $696.73, up 1.36%, at 1:46 p.m. Eastern. Danaher opened at $217.56, down 3.0% from $224.24, after trading as much as 6.4% lower before the open, and was up 2.76% at $230.44, near a high of $233.95.
Nothing in the companies' statements explains the early decline or the recovery.
Two readings
One reading is that the tools sector is turning. Danaher's growth excluding respiratory is accelerating, Thermo Fisher grew organically at 6% and raised margins by more than a point, and both stocks recovered after early weakness.
The other reading is that the recovery in laboratory demand is narrower than the beats suggest. Danaher's total core growth is still 3%, its respiratory franchise is shrinking by about 20% this year, and its bioprocessing outlook was not raised.
What to watch
Bioprocessing orders in coming quarters; the pace of the respiratory decline; Danaher's fourth-quarter core growth excluding respiratory, which the company puts at 4% to 5%; and Thermo Fisher's execution against its raised 2026 outlook. A fourth quarter at the upper end of Danaher's range would support the idea that the underlying business is accelerating.