Morgan Stanley initiated coverage of Waters Corp. (NYSE: WAT) with an Equalweight rating and a $423 price target, noting that while the company remained a well-run, high-margin operator with strong recurring revenue, its latest acquisition introduced near-term uncertainties.

The firm said Waters had executed effectively on its transformation priorities over the past five years, improving commercial capabilities and expanding into higher-growth adjacencies. Large molecule chemistry had grown to account for 50% of bioseparation revenues, and the company continued to advance LC-MS in clinical diagnostics and widen its footprint in battery testing, both of which were considered high-single-digit growth drivers.

However, Morgan Stanley said the company's plan to acquire Becton Dickinson's Biosciences and Diagnostics businesses added integration risk due to the size and complexity of the assets—significantly larger and more diverse than any acquisition Waters had previously completed. The firm said successful integration would depend on Waters' ability to apply its disciplined operating model while navigating the acquired units' capital-spending pressures and recovery timelines.

Despite a favorable view of Waters' core business, Morgan Stanley said these integration challenges limited near-term visibility, warranting an Equalweight stance.