HSBC initiated coverage of Waters Corp. with a Buy rating and set a $460 price target, saying the company’s planned purchase of Becton Dickinson’s Biosciences and Diagnostic Solutions unit could be a key driver of accelerated earnings and valuation upside.
The bank characterizes Waters as offering a growth-at-a-reasonable-price profile. HSBC expects mid-teens earnings growth supported by an equipment replacement cycle and by both revenue and cost synergies arising from the $17.5 billion acquisition. The report also points to operating leverage on an already healthy margin base as a source of incremental profit expansion.
HSBC noted that a higher proportion of recurring revenue - from consumables and services - should provide greater revenue stability for the combined group. The report adds that lower interest rates and post-deal deleveraging could help pave the way for a valuation rerating if financial conditions and balance-sheet repair proceed as expected.
The transaction is expected to close around the end of the first quarter of 2026. HSBC says that the deal would create a broader life sciences and diagnostics company with a larger installed base, a footprint the bank believes should support top-tier growth and margin performance as replacement demand materializes.
At the same time, HSBC acknowledged investor skepticism about the transaction. The bank flagged concerns that the price paid for BD’s assets is high, which could weigh on near-term returns. It also identified continuing uncertainty in China - tied to volume-based procurement and anti-corruption efforts - and broader geopolitical risks that could pressure growth and margins.
Despite those cautions, HSBC argued the market may be underestimating the strategic benefits of the deal. The bank expects the combined business to gain faster access to higher-growth segments, to deliver a stronger product-launch pipeline, and to realize meaningful synergies that can drive market share gains over time. Notably, HSBC’s forecasts in the report are presented with Waters on a standalone basis.
HSBC derived its $460 price target from a 24x pro forma 2028 earnings multiple. The bank highlighted two near-term catalysts to watch: completion of the deal by the end of the first quarter of 2026, and Waters’ fiscal 2025 results, due on Feb. 12.