Waters Corporation reported results for Q2 that exceeded investor expectations, with both sales and adjusted earnings per share meeting or surpassing Wall Street projections. Management attributed growth to robust demand for liquid chromatography and mass spectrometry instruments, particularly in pharmaceutical replacement cycles and contract development manufacturing organizations (CDMOs). CEO Udit Batra pointed to recurring revenue growth, especially in chemistry and service segments, as well as strong adoption of new products like the Alliance iS platform and Xevo TQ Absolute XR. However, operating margins declined, impacted by tariffs and regional sales mix, which CFO Amol Chaubal described as a combination of “geographical mix and…costs associated with tariff remediation.”
Is now the time to buy WAT? Find out in our full research report (it’s free).
Waters Corporation (WAT) Q2 CY2025 Highlights:
- Revenue: $771.3 million vs analyst estimates of $746.6 million (8.9% year-on-year growth, 3.3% beat)
- Adjusted EPS: $2.95 vs analyst expectations of $2.94 (in line)
- Adjusted EBITDA: $276.3 million vs analyst estimates of $261 million (35.8% margin, 5.9% beat)
- Revenue Guidance for Q3 CY2025 is $781 million at the midpoint, roughly in line with what analysts were expecting
- Management slightly raised its full-year Adjusted EPS guidance to $13 at the midpoint
- Operating Margin: 24.4%, down from 26.7% in the same quarter last year
- Organic Revenue rose 8% year on year vs analyst estimates of 6.4% growth (158.2 basis point beat)
- Market Capitalization: $17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Waters Corporation’s Q2 Earnings Call
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Jack Meehan (Nephron) asked about the strength and sustainability of the instrument replacement cycle in LC and competitive dynamics. CEO Udit Batra pointed to robust demand, especially among large pharma and CDMOs, and highlighted product differentiation with the Alliance iS and Xevo TQ Absolute XR platforms.
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Tycho W. Peterson (Jefferies) probed the durability of high single-digit LCMS growth and the impact of tariffs. Batra and CFO Amol Chaubal replied that replacement cycles remain healthy and that guidance is derisked for the second half, not assuming recent momentum will fully continue.
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Rachel Marie Vatnsdal Olson (JPMorgan) focused on operating margin softness and the impact of tariffs, as well as the $8 million pull-forward in chemistry sales. Chaubal explained that gross margin was affected by tariff remediation and sales mix, and that the pull-forward was prudently modeled to normalize over the next two quarters.
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Puneet Souda (Leerink) asked about the contributions of NIH funding to academic and government revenue and the expected sequence of synergy realization post-BD acquisition. Batra noted conservatism in funding assumptions and outlined immediate operational impacts in instrument replacement, service, and e-commerce upon closing.
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Sung Ji Nam (Scotiabank) inquired about pharma drug discovery trends and tariff risks in India. Batra and Chaubal indicated drug discovery remains subdued and that generics in India are not currently impacted by tariffs, with customers ramping up capacity for upcoming opportunities.
Catalysts in Upcoming Quarters
Over the coming quarters, our analysts will be watching (1) early signs of synergy realization and operational improvements following the BD integration, (2) sustained momentum in recurring revenue and adoption of new product launches, and (3) any stabilization or improvement in operating margins amid ongoing tariff and regional sales mix headwinds. Developments in academic and government funding, as well as China’s market trajectory, will also be closely monitored for their impact on growth.
Waters Corporation currently trades at $285.52, down from $290.71 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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