Here’s How Danaher Corporation (DHR) Benefits from Switching Costs

Soumya Eswaran

Thu, Apr 10, 2025, 8:44 AM 3 min read

Andvari Associates, an investment management firm, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter the fund returned 7.2% net of fees compared to the SPDR S&P 500 ETF’s 4.3% decline. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first quarter 2025 investor letter, Andvari Associates emphasized stocks such as Danaher Corporation (NYSE:DHR). Danaher Corporation (NYSE:DHR) manufactures and distributes a diverse portfolio of products and services for professional, medical, industrial, and commercial applications. The one-month return Danaher Corporation (NYSE:DHR) was -12.60%, and its shares lost 26.77% of their value over the last 52 weeks. On April 9, 2025, Danaher Corporation (NYSE:DHR) stock closed at $191.89 per share with a market capitalization of $127.554 billion.

Andvari Associates stated the following regarding Danaher Corporation (NYSE:DHR) in its Q1 2025 investor letter:

"For the handful of companies in Andvari portfolios that do make physical goods, they all share a mitigating factor: they all have above average pricing power. The source of their pricing power stems from selling products that are critical to the end user and yet are a small proportion of the customers’ total costs. They also often benefit from high switching costs. Danaher Corporation (NYSE:DHR), Mettler-Toledo, Zoetis, and IDEXX fall into this camp, as well as TransDigm.

A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.

Danaher Corporation (NYSE:DHR) is in 27th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held Danaher Corporation (NYSE:DHR) at the end of the fourth quarter which was 98 in the previous quarter. In 2024, Danaher Corporation (NYSE:DHR) reported an annual sale of $23.9 billion with a 1.5% decrease in core revenue. In the fourth quarter the company generated $6.5 billion in sales, showing a 1% core revenue growth. While we acknowledge the potential of Danaher Corporation (NYSE:DHR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.