Goldman Sachs: Veralto’s third-quarter profit beats expectations as water quality drives growth; full-year guidance raised

Where did third-quarter results exceed expectations?

Veralto reported third-quarter 2026 revenue of 1.51 billion dollars, slightly above the 1.5 billion dollars expected by Goldman Sachs and the FactSet market consensus. Core sales grew 5.1% year over year, above Goldman Sachs’ forecast of 4.4%.
The profit beat was larger: adjusted EBITDA was 397 million dollars, above Goldman Sachs’ forecast of 373 million dollars and the market consensus of 374 million dollars. Adjusted earnings per share were 1.18 dollars, also above their respective estimates of 1.08 dollars and 1.09 dollars.
The company’s overall adjusted operating margin was 25.6%, up 170 basis points year over year and above Goldman Sachs’ forecast of 24.2%.

Water Quality revenue was 939 million dollars, above Goldman Sachs’ forecast of 916 million dollars. Core sales grew 6.4% year over year, above the bank’s forecast of 3.7%. Core sales grew 8.8% in North America and 7.3% in Western Europe, while high-growth markets declined 1.1%.
Product Quality & Innovation revenue was 570 million dollars, below Goldman Sachs’ forecast of approximately 579 million dollars. Core sales grew 3.2%, also below the bank’s forecast of 5.5%. The segment’s revenue performance was weaker than expected.
In terms of margins, Water Quality’s adjusted operating margin was 26.6%, up approximately 30 basis points year over year. Product Quality & Innovation reached 28.2%, up approximately 280 basis points year over year and above Goldman Sachs’ forecast of 26.3%.

The company revised its full-year 2026 core sales growth guidance from 4.0%–4.5% to 4.2%–4.5%. It expects adjusted operating margin to expand by approximately 50 basis points, compared with previous guidance for expansion of 25–50 basis points.
Full-year adjusted earnings-per-share guidance was raised from 4.35–4.43 dollars to 4.49–4.52 dollars. The midpoint rose approximately 2.6% and was also above Goldman Sachs’ forecast of 4.37 dollars and the market consensus of 4.39 dollars.
For the fourth quarter, the company guided for core sales growth of 5.5%–6.5% year over year, versus Goldman Sachs’ previous forecast of 6.4%. Adjusted earnings-per-share guidance was 1.13–1.16 dollars, above the bank’s forecast of 1.11 dollars.
Goldman Sachs has a Buy rating on the company and a 12-month price target of 118 dollars. Risks cited by the bank include a slower recovery in consumer goods and pharmaceutical demand, insufficient progress on water regulation, global expansion and industrial spending falling short of expectations, and currency and competitive pressures.