Deutsche Bank Downgrades Danaher (DHR) to Hold; $85 PT

September 12, 2008 9:08 AM EDT

Deutsche Bank downgrades Danaher (NYSE: DHR) from Buy to Hold. The firm lowered its price target on Danaher to $85.

The firm cites a premium for earnings protection which has ballooned to cyclical highs. Deutsche said it is also concerned with Danaher's exposure to EU/FX.

Despite Danaher's more defensive revenue footprint that should imply a high degree of earnings protection in an economic slowdown, Deutsche estimates that the stock trades at a 40% premium to its peers, which is "close to a cyclical peak and 16ppts above its 5Y average." When compared to other high quality names in the sector, Deutsche believes that Danaher is trading at or close to its maximum P/E multiple premium.

Given recent concerns related to a European recession moving into '09, the firm is concerned that Danaher, with one of the largest European sales footprints at over 30% FY08 revs, will feel pressure from foreign exchange.

Deutsche reduced its FY09 EPS estimate on Danaher to $4.75, versus the consensus of $4.94.

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and consumer products.

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