Waters Corporation WAT shares rose 0.74% in the after-hours trading as it reported fourth-quarter 2024 non-GAAP earnings of $4.10 per share, beating the Zacks Consensus Estimate by 1.99%. The company had registered earnings of $3.62 in the year-ago quarter, increasing 13.3% on a year-over-year basis.

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Net sales of $872.7 million topped the Zacks Consensus Estimate of $857 million. The figure increased 6.5% on a reported basis and grew 8% on a constant-currency basis from the year-ago quarter.

Waters delivered a strong fourth quarter, driven by double-digit growth in the Pharma segment, while both instrument sales and recurring revenue posted high-single-digit gains in constant currency. Growth rebounded across all major regions — Asia, the Americas and Europe — led by the strong adoption of new products and the successful execution of strategic initiatives.

WAT’s Top Line in Detail

Waters’ net sales figure can be categorized in four ways:

Operating Segment: WAT operates under two organized segments — Waters and TA.

The Waters segment (87.6% of net sales) generated sales worth $764.3 million, up 6.6% year over year. Sales in the TA segment were $108.4 million (12.4% of net sales), reflecting 5.7% year-over-year growth.

Products & Services: The division comprises three segments — Instruments, Services and Chemistry.

Instruments sales (48.1% of net sales) were $419.6 million, increasing 5.6% on a year-over-year basis.

Services sales (34.6% of net sales) were $301.8 million, climbing 8.2% year over year.

Chemistry sales (17.3% of net sales) were $151.3 million, growing 5.5% year over year.

The Services and Chemistry segments jointly generated recurring revenues of $453.1 million, up 7.3% year over year.

Markets: Waters serves three end markets — Pharmaceutical, Industrial, and Governmental and Academic.

The Pharmaceutical market (57.2% of net sales) generated sales of $498.8 million, which increased 7.6% on a year-over-year basis.

The Industrial market’s (30.3% of net sales) sales were $264 million, up 1.5% year over year.

The Governmental and Academic market (12.6% of net sales) generated $109.9 million in sales, which rose 15% year over year.

Geography: Waters’ operating regions include Asia, the Americas and Europe.

Asia (31.3% of net sales) generated $272.9 million in sales, up 4.2% on a year-over-year basis.

Sales in the Americas (36.8% of net sales) were $321 million, increasing 5.7% year over year.

Europe (31.9% of net sales) generated $278.8 million in sales, up 9.8% year over year.

WAT’s Operating Details

In the fourth quarter, non-GAAP selling and administrative expenses were $168.5 million, down 2.6% year over year. As a percentage of net sales, the figure contracted 180 basis points (bps) on a year-over-year basis.

Research and development spending of $46.3 million increased 8.9% year over year. As a percentage of net sales, the figure expanded 10 bps year over year.

The adjusted operating margin was 35.5%, which increased by 60 bps year over year.

Waters’ Balance Sheet & Cash Flow

As of Dec. 31, 2024, cash, cash equivalents and investments were $325.4 million, down from $331.5 million as of Sept. 28, 2024.

Waters generated cash from operations of $240.1 million in the reported quarter, up from $204.6 million in the prior quarter.

The company recorded a free cash flow of $188 million in the fourth quarter.

WAT Initiates Q1 & 2025 Guidance

For the first quarter of 2025, Waters expects non-GAAP earnings of $2.17-$2.25 per share.

The Zacks Consensus Estimate for earnings is pegged at $2.47, unchanged over the past 30 days, indicating 11.76% growth from the figure reported in the year-ago quarter.

Management anticipates organic sales to grow 4-7% on a constant-currency basis. WAT projects 3% lower sales growth due to the impacts of foreign exchange fluctuations.

On a reported basis, total sales growth is predicted to be 1-4%.

The Zacks Consensus Estimate for revenues is pegged at $678.85 million, suggesting 6.60% year-over-year growth.

For 2025, Waters anticipates non-GAAP earnings of $12.70-$13.00 per share. 

The Zacks Consensus Estimate for earnings is pegged at $12.80, down 8 cents over the past 30 days, indicating an 8.52% decline from the figure reported in 2023.

Waters projects 2024 organic sales to increase 4.5-7% on a constant-currency basis. WAT projects sales growth to be affected by 2% due to unfavorable foreign exchange fluctuations.

On a reported basis, total sales are projected to grow 2.5-5%.

The Zacks Consensus Estimate for revenues is pegged at $3.10 billion, indicating year-over-year growth of 5.48%.

Waters Zacks Rank & Stocks to Consider

Currently, Waters carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical market sector are Alnylam Pharmaceuticals ALNY, AdaptHealth AHCO and Outset Medical OM, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alnylam Pharmaceuticals shares have gained 13% in the year-to-date period. ALNY’s long-term earnings growth rate is projected at 32.56%.

AdaptHealth shares have declined 6% in the year-to-date period. The long-term earnings growth rate for AHCO is anticipated at 8.13%.

Outset Medical shares have lost 29.7% in the year-to-date period. OM’s long-term earnings growth rate is estimated to be 25.07%.

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