In July 2025, Becton, Dickinson and Company (NYSE:BDX)Â agreed to combine its Biosciences & Diagnostic Solutions business with Waters Corporation (NYSE:WAT).
On Monday, William Blair initiated coverage on Waters with an Outperform rating.
Investment Thesis
While the merger adds complexity to the narrative, analyst Matt Larew sees a strong strategic fit and greater synergy upside than the market initially priced in.
William Blair estimates EPS accretion of ~$0.10 in 2026, rising to ~$2.70 by 2028.
Waters holds a leading position in the resilient quality assurance and control (QA/QC) market, with incremental growth catalysts beginning to emerge.
Core end markets are positioned to improve next year versus this year, marking the first year-over-year recovery since pre-COVID.
Analyst Larew notes that Waters shares fell about 20% in the week after the BD deal was announced, as investors were caught off guard by the company adding a large, different business to an otherwise simple, high-margin model—raising concerns around integration risk and a changed financial profile.
The stock has since rebounded, helped by a macro-driven recovery in tools. Larew also believes investor confidence has improved as management has clarified synergy targets and strategic fit through recent investor outreach.
The analyst models $15.55 of EPS in 2027 ($17.18 once the BD merger closes).
Growth Of New Company
New Waters will continue to have above-group growth, margins, and ROIC. Larew sees roughly 20% upside by year-end 2026 based on a multiple of 26 times its 2027 post-merger EPS target (current valuation is 26.7 times, the 10-year average of 25.9 times, and peers at 25.2 times).
Additionally, William Blair noted that the addition to the portfolio overlaps with and strategic adjacencies, the success of similar large M&A deals in the life sciences space over the last 20 years.
Citing Thermo Fisher Scientific Inc.’s (NYSE:TMO) acquisition of Life Technologies and Merck’s acquisition of Sigma-Aldrich, both realizing greater post-acquisition synergies compared to pre-deal expected synergies, the analyst wrote that the company’s target for $345 million in total EBITDA synergies by year five will prove conservative.
WAT Price Action: Waters shares were up 1.21% at $399.75 at the time of publication on Tuesday, according to Benzinga Pro data.
Read Next:
Photo via Shutterstock
Recent Comments