Waters' (WAT) Q4 guidance is conservative, as there is no inherent reason for legacy Waters' growth to decelerate and Becton Dickinson businesses are viewed as about 1% growers on a two-year stack, but management does not see any benefit to a bigger raise, RBC Capital Markets said in a Monday research note.

The company could achieve high single-digit growth in 2027, even if any reshoring demand is unlikely to accrue meaningfully until 2028, according to the note.

RBC's prior assumption of 200 basis points of operating margin expansion in 2027 was likely too optimistic, as the full year of Becton Dickinson ownership will dampen base-period margins. The analysts lowered their 2027 margin assumptions, but their 2027 EPS estimate remains 3% above the Street, with a bias to the upside.

The company's improved microbiology growth rate in Q2 benefited from 300 basis points of price increases across consumables, but growth trends in research flow cytometry remain negative, with the remaining challenges being muted US academic/government demand and biotech demand, analysts added.

RBC has an outperform rating on the stock, with a price target of $475 per share.

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