Waters NYSE: WAT President and Chief Executive Officer Udit Batra said the company’s second-quarter performance exceeded expectations, supported by broad-based growth in its legacy analytical-science operations and early progress integrating acquired Becton Dickinson businesses.
Speaking at a JPMorgan event with Casey Woodring, JPMorgan’s vice president of equity research, Batra said Waters delivered 9% organic growth in the quarter, above its 6% to 8% guidance range. Orders also outpaced sales, according to Batra.
Broad-Based Growth in Legacy Business
Batra said instruments and service each grew at high-single-digit rates during the quarter, while chemistry revenue rose at a double-digit rate. He said chemistry growth would have been 16% after accounting for what he described as prior-year demand pulled forward around “Liberation Day.”
Geographically, Waters recorded mid- to high-single-digit growth in the U.S. and mid-single-digit growth in Europe. India grew more than 20%, while China posted double-digit growth; Batra said China’s growth would have been in the mid-teens when adjusted for the prior-year pull-forward effect.
Pharmaceutical end markets grew at a double-digit rate, helped by an instrument replacement cycle among large pharmaceutical companies in the U.S. and Europe and demand from generic-drug customers in India. Pharmaceutical revenue in China grew more than 24%, Batra said, following roughly 50% growth in the first quarter.
Academic and government demand also grew at a double-digit rate, driven principally by budget releases in Europe. Industrial revenue increased at a low-single-digit pace.
Batra described Waters’ base business as a “sustainably high single-digit grower,” noting that it has averaged approximately 8% growth over the past seven quarters and grew at a double-digit average rate during the first half.
AI and Replacement Cycle Opportunities
Batra said Waters is seeing early evidence that artificial intelligence is increasing demand for laboratory consumables and software, especially in quality-control, quality-assurance and late-stage drug-development workflows.
He said AI adoption can occur faster in quality-control environments because reagents, instrument protocols and data workflows are more standardized than in early drug discovery. Waters’ Empower software is used as a software-of-record platform in pharmaceutical quality-control applications, Batra said, adding that customers are purchasing additional software seats to train AI agents on established workflows.
Waters is also seeing higher consumption of columns and reagents in discovery settings, although at a slower pace than in quality-control workflows. Batra said the company intends to provide a quantitative assessment of AI-related demand once it has more customer data points.
On instruments, Batra said the company has visibility into replacement demand through the end of 2027. He said biotechnology companies, contract research organizations and drug-discovery customers have lagged other customer segments in replacing equipment but are beginning to resume purchases.
New products are also contributing to growth, he said. Batra cited the Alliance iS platform in pharmaceutical quality-control applications, the Xevo TQ Absolute and TQ Absolute XR systems for PFAS testing, and the Xevo MRT high-resolution mass spectrometry platform for drug discovery, development and GLP-1 impurity testing.
Integration Progress and Becton Dickinson Businesses
Batra said the acquired Becton Dickinson businesses grew about 4% on average during the quarter, or approximately 6% excluding a 200-basis-point China headwind. Waters’ 180-day integration plan has focused on increasing sales activity, pricing, cross-selling and China localization.
The company expects to reach a $200 million annualized cost-synergy run rate by year-end, Batra said, achieving a target originally set for the end of three years within nine months. He said additional opportunities remain across procurement, manufacturing and distribution.
In biosciences, Batra said revenue grew 3% in the quarter, or 5% excluding China. The company has localized parts of its high-volume flow-cytometry portfolio for China and expects initial sales late in the third quarter and in the fourth quarter. It also launched the A7 spectral flow-cytometry instrument on Sept. 14, which Batra said is designed to improve reproducibility and transferability in high-volume settings.
Clinical flow-cytometry reagents grew at a high-single-digit rate, aided by oncology testing and clinical-trial activity. Research reagents returned to growth as Waters improved e-commerce fulfillment and implemented differentiated pricing for certain proprietary antibody products, Batra said.
In microbiology, Waters sees a replacement opportunity among approximately 12,000 systems that are more than five years old, including more than half that are over 10 years old. Batra said replacement activity, pricing and underlying volume growth could provide additional growth, though about half of the business operates under a reagent-rental model that changes the timing of revenue recognition.
Reshoring, Diagnostics and Longer-Term Outlook
Batra said Waters expects pharmaceutical manufacturing reshoring to become an incremental growth driver from 2027 through 2030, but he declined to quantify its expected contribution before concrete orders emerge. He said instrument sales cycles generally run three to six months and that construction activity at pharmaceutical sites should translate into more visible equipment orders as laboratories are outfitted.
He also said Waters applies a high burden of proof before classifying orders as reshoring-related. The company did not classify a $10 million second-quarter order tied to an expanded North Carolina site or a $4 million order tied to a Wilmington, Delaware, expansion as reshoring because it viewed them as capacity expansions that could have occurred regardless.
For molecular diagnostics, Batra said the BD COR high-throughput platform installed 15 systems in the second quarter, compared with four installations during all of 2025. He attributed part of the momentum to a home and self-test option for HPV testing and said Waters plans to move additional assays from its BD MAX platform to the COR platform over time.
Batra said the company sees continued opportunity in China, AI-related consumables demand, instrument replacements and pharmaceutical capital spending. He also cautioned that integrating a carved-out business remains operationally demanding, requiring continued attention to systems, processes and transitional services.
About Waters (NYSE:WAT)
Waters Corporation NYSE: WAT develops and manufactures analytical workflow technologies used to measure, characterize and manage chemical and biological substances. Its customers include pharmaceutical and biopharmaceutical companies, industrial organizations, academic institutions and government laboratories.
The company's portfolio includes liquid chromatography, mass spectrometry and thermal analysis instruments, along with chromatography columns, consumables, laboratory software and services.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Waters, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Waters wasn't on the list.
While Waters currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI boom is creating opportunities across semiconductors, cloud computing, enterprise software, infrastructure, cybersecurity, and automation.
Inside this report, you’ll find 10 companies positioned to benefit as artificial intelligence moves from hype to real-world deployment and becomes a core growth driver for corporate America.
Get This Free Report
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
