QPD In Action – 3Q23

QPD In Action – 3Q23

We put our Quality | Price | Discipline process in motion. This quarter, we're featuring a name in the life-sciences space with a diversified business model that could stand to benefit from the weight loss drug craze.

Waters Corporation (WAT)

Waters Corp. is a high-quality life sciences tools company focused on solutions involving liquid chromatography, mass spectrometry, and thermal analysis.


 “One of the attractive qualities of an investment like Waters is that their instruments and consumables are an integral part of the pharma manufacturing and quality control process. Further, there are attractive end markets that are growing faster than the overall pharmaceutical market, like the GLP-1 drugs, which we believe will enable Waters, on the margin, to outgrow their peers. Given how high profile these drugs are, in my opinion, it also speaks to the strong competitive position that Waters has.”
– Rich Carney – Cambiar Healthcare Analyst


Key Facts

  • Waters has fostered excellent customer relationships and a solid operational reputation, with a leading market share in liquid chromatography. Company has grown faster than the market over the last 10 years driven by product innovation and organic growth1
  • Company operates a diversified business model (by end market, geography, and product type) and has generated 55% recurring revenues, strong margins, and market-leading returns on capital2.
  • Market concerns around cyclicality have driven the stock down to multi-year valuation lows (P/E and FCF yield) – we believe these concerns are transitory and overblown, providing an attractive entry point and opportunity for a re-rating over time.





Company adheres to Cambiar’s stringent quality underwriting policy, including:

  • Strong margins and market-leading returns on capital
  • Growing end markets, strong organic growth, and recurring revenue mix
  • Attractive share repurchase plan
  • New management aligned with shareholders

Cambiar identified an attractive entry point characterized as:

  • Stock trading below 5-year average P/E valuation.
  • Free cash flow yield near 10-year low, which we expect to improve and drive stock re-rating.


  • We believe the current valuation reflects transitory cyclical concerns that should normalize in the next 8-12 months, which would catalyze a re-rating in the stock.
  • Waters is a high-quality operator in a growing market segment and should continue to compound earnings over the medium-term.


SECURITY FOUND IN FOLLOWING PORTFOLIO(s): Large Cap Value, Opportunity Fund, SMID Value & SMID Fund
Rich Carney, CFA




Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar.  Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements. The information provided is not intended to be, and should not be construed as, investment, legal or tax advice.  Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation.  Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook and are not intended to represent the performance or be an indicator for how the accounts have performed or may perform in the future. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time.

Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts may be based upon third-party sources that are deemed to be reliable; however, Cambiar does not guarantee its accuracy or completeness.  Past performance is no indication of future results.  All material is provided for informational purposes only, and there is no guarantee that the opinions expressed herein will be valid beyond the date of this communication.

1Source: Cambiar Analysis & Waters company disclosure
Source: Waters 1H2023 financial results