Danaher is tapping the M&A well yet again. But we might have had enough

Danaher ‘s days in the portfolio may be numbered. We’re again left disappointed after Danaher’s latest acquisition plan failed to inspire Wall Street. Shares of the life sciences giant lost more than 3.5% following Tuesday’s announcement that the company agreed to buy medtech Masimo for $180 per share in cash, or more than $9.6 billion. Masimo stock soared 34% on the news, but was still trading below the intended purchase price. Including debt assumption and net of acquired cash, Danaher puts the total enterprise value of the deal at $9.9 billion. Danaher’s market capitalization at the end of last week was roughly $150 billion. It plans to finance the deal with cash on hand and debt. Danaher said the deal is expected to be accretive to adjusted diluted net earnings per common share by 15 to 20 cents in the first full year and about 70 cents five years out from when it closes. Danaher said it expects Masimo to deliver high-single-digit core revenue growth over the long term, accelerating the core revenue growth profile of Danaher’s diagnostics segment. Why is Danaher’s stock down, especially considering the company has a highly regarded M & A track record? The deal for Masimo, a leader in pulse oximetry and other patient monitoring solutions, is expensive. Danaher estimated the transaction multiple at 18 times estimated 2027 EBITDA (earnings before interest, taxes, depreciation, and amortization), with the hope of bringing the multiple down to 15 times through synergies. Plus, Leerink analysts noted that Masimo’s specialty is in medical technology, which is a new vertical for Danaher and a departure from the typical life science tools and diagnostics area it usually does deals in. Whereas Masimo’s products are used in hospital rooms to monitor how a patient’s heart is pumping oxygen and how the brain is functioning, Danaher has become known for supplying the tools and other products used to research, develop and manufacturing drugs. It also sells diagnostics equipment used by hospitals, doctors and labs to identify diseases and make treatment decisions. “Maybe [Masimo] is slightly outside Danaher’s wheelhouse,” Jeff Marks, director of portfolio analysis, said during Tuesday’s Morning Meeting. Danaher has for years relied on acquisitions and divestitures as part of its growth and transformation strategy, turning itself into a pure play health-care company from a diversified industrial conglomerate. Entering 2026, there was chatter that M & A could be back on the table for Danaher, given its last major deal came in late 2023, when it acquired British antibody maker Abcam for $5.7 billion . In a December note to clients, Morgan Stanley analysts speculated, however, that its preference may be for “tuck-ins in the mid-term versus more transformative deals.” Jim Cramer has been frustrated with Danaher’s performance for a while. He’s made no secret of it. The stock has lost more than 10% in 2026, which extends its yearly losing streak to five in a row. We trimmed our Danaher position back in late October, following a decent post-earnings rally that continued into late January and a multiyear high of nearly $243. However, the fall has been swift, with shares nearly 7% below our October 2025 sale price of nearly $221. Danaher’s 2026 guidance, issued in late January, was a letdown for a market that was hoping the company and the broader life-sciences industry had fully turned the corner toward following multiple sluggish, post-pandemic years. The bottom line, according to Marks, is that the Club is disappointed by the stock moves on Tuesday and for the year. “Probably going to look to move on soon,” Marks added. So, watch out for a possible Danaher exit ahead. We don’t have any firm timing on when that may happen yet. (Jim Cramer’s Charitable Trust is long DHR. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.