Danaher (DHR) is a global conglomerate that manufactures and sells scientific instruments and consumables in three segments: Life Sciences, Diagnostics, and Environmental and Applied Solutions.
Corporate insiders at Danaher sold more than $400 million worth of their company’s stock during the past three months.
The majority of insider sales happened in November and included a $378 million sale by a key insider, with $18.2 million worth of DHR stock being sold by employees during the past week. DHR stock investors could be wondering if they should be selling too.
DHR stock price has risen by 42% so far this year, and it appears as though insiders are cashing out. I am neutral on the stock.
DHR Stock: Insider Sells Accelerated in November
In a pattern last seen in February, eight corporate insiders at Danaher sold their employer’s stock in November. See Danaher Insider Trading Activity on TipRanks >>
Latest insider sales included transactions by key executives, including the chief financial officer, Matthew McGrew, who sold $842,720 worth of DHR stock during the past week.
He was outdone by Daniel Raskas, the company’s senior vice-president of corporate development, who cashed out $4 million, and Angela Lalor (SVP, HR), who banked nearly $12.3 million from her sales of Danaher stock last week.
Director Elias Zerhouni was also among the top insiders who sold shares recently after liquidating about $1.1 million worth of stock last week.
Mixed Signals
Two of the above insiders’ transactions seem to provide some trading and investing signals for market participants.
Raskas acquired 12,300 shares on November 26 at $46.13 per share and sold them all on the same day for $325.33 each for gross proceeds of over $4 million.
His was an exercise of vested deep-in-the-money stock options in the Danaher stock option plan. As a long-serving employee (since 2004), Daniel’s options allowed him to acquire Danaher stock at prices last seen about a decade ago.
Lalor had a similar transaction on November 29. She exercised her employee stock options at $65.83 per share. Angela acquired 37,513 shares and sold them all at $327 each, for gross proceeds of $12.27 million. She still has 30,937 shares in her portfolio.
In other words, Angela is still heavily invested in Danaher stock.
However, the case could be read differently for Zerhouni and McGrew.
Elias sold more than 3,400 shares in Danaher’s equity on November 29. This reduced his total stake in DHR stock to 25,139 directly held shares. This follows his earlier sale of $1.9 million worth of Danaher stock during the first week of November. (Zerhouni still holds another 7,500 shares.)
McGrew was also among the insiders selling DHR stock in November. Matthew sold 2,589 directly held shares in the market on November 26 for gross proceeds of nearly $843,000. He still retains 6,811 directly held shares and 8,707 DHR shares stashed in his retirement savings account.
$378M Insider Sale
All the insider transactions noted above pale compared to chairman Mitchell Rales’ disposal of $377.9 million worth of Danaher stock earlier in November. Mitchell liquidated his 401(k) during the first week of November.
However, Rales still indirectly owns nearly $8.7-billion worth of the company’s shares. It appears as if his transactions were purely personal finance-related moves.
Celebrating Success?
Danaher’s executives and key insiders are seemingly celebrating their success in building a robust business over the past decade.
The company recently reported market-beating earnings results for the third quarter of this year.
Revenue increased by 23% year-over-year to $7.2 billion. Operations generated a strong 39% growth in diluted earnings per share to $2.39 that beat analyst projections for $2.15 per diluted share.
Most noteworthy, cash flow has been emphatically surging too. You can read fellow contributor Payal Gupta’s latest coverage of Danaher’s earnings for more information.
Wall Street’s Take
Turning to Wall Street, the consensus rating on Danaher stock is a Strong Buy based on eight Buy ratings and a single Hold rating. The average Danaher price target is $351, implying 11% upside potential.
Disclosure: At the time of publication, Brian Paradza did not have a position in any of the securities mentioned in this article.
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