WAT: Initiate at Outperform; BD Life Sciences Businesses Were Underwater, but Not Under Waters

Research evidence excerpt

WAT: Initiate at Outperform; BD Life Sciences Businesses Were Underwater, but Not Under Waters

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synergy actions and taken steps to improve the Biosciences and Diagnostics All values in USD unless otherwise noted.

sales trajectories. Priced as of prior trading day's market close, EST (unless otherwise noted).

Favorable view of industry consolidation in Tools; Waters the new

consolidator? History has shown consolidation works as a general strategy

in life science tools, due in part to comparable business models and

overlapping channels. We expect to add Waters/Becton to the list of

successful large deals, and see a meaningfully expanded opportunity set

for Waters to continue to consolidate in 2028+. The company should have

substantially greater deal capacity in the future, as its free cash flow scales

from ~$500M to $2B annually following a successful BD integration.

Drug manufacturing exposure a structural tailwind; minimal academic/

government drag. Waters’ analytical instruments business (~15% of

sales) is well-positioned to capitalize on recovering pharma demand and

U.S. reshoring—themes we favor over R&D tools—with reshoring alone

representing a potential $1B incremental sales opportunity for the industry.

Meanwhile, Waters’ <5% academic/government exposure makes it one of

the least affected names in diversified Tools to demand headwinds in this

end market.

Valuation: Our $435 price target is based on ~19.5x EV/EBITDA, a premium

to the peer group median EV/EBITDA of ~16.5x, which we believe is

warranted given faster forecast organic sales growth vs peers (~6% vs ~4.5%

from 2025 - 2028E).

Disseminated: Jul 8, 2026 16:29EDT; Produced: Jul 8, 2026 16:29EDT

For Required Conflicts Disclosures, see page 12