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Becton, Dickinson (BDX) Poised on C.R. Bard Acquisition


On Jul 7, we issued an updated research report on Franklin Lakes, NJ-based Becton, Dickinson and Company BDX. The company is a medical technology firm engaged principally in the development, manufacture and sale of medical devices, instrument systems and reagents.

Over the past one month, Becton, Dickinson has traded above the Zacks categorized Medical – Dental Supplies sub-industry. The stock has gained 3.55% in this period, higher than the broader industry’s 3.16% improvement. The company’s five-year historical growth rate is also favorable at 10.10%, as compared with 2.80% of the S&P 500 index.

This Zacks Rank #3 (Hold) company’s estimate revision trend for the current year looks favorable. In the last 60 days, five estimates have moved up, while one moved in the opposite direction. The estimate revision over the same time period increased around 0.1% to $9.43 per share.

The market is upbeat about the company’s strategic acquisitions and collaborations. Becton, Dickinson recently signed an agreement to acquire C.R. Bard Inc. BCR. Per management, Becton, Dickinson is on its way to become one of the biggest medical technology devices company in the world with this buyout. The cash-plus-stock acquisition is valued at $24 billion. After the completion of the deal in the fourth quarter of fiscal 2017, the company plans to create a third business segment, BD Interventional. Notably, C.R. Bard will be integrated into this vertical.

Coming to the strategic advantages post the closure of the deal, Becton, Dickinson will generate high-single digit growth in adjusted earnings per share by fiscal 2019. The transaction will lead to a pre-tax annual savings worth $300 million in fiscal 2020. BD will be able to expand to new areas where C.R. Bard currently operates. These include fast-growing vascular access segments like PICCs (peripherally inserted central catheters), midlines and drug delivery ports.

In this regard, we note that Becton, Dickinson announced collaboration for its IMPRESS instrument management system with cloud-based solution provider, UniteOR's surgical tray tracking and vendor management solution. The system provides greater visibility of surgical tray management to health-care workers in the operating room and sterile processing department. This integration with UniteOR allows Becton, Dickinson to offer a truly integrated approach for complex challenges that hospitals and health systems face with regard to surgical tracking.

Also, the company completed the buyout of Israeli-based, Caesarea Medical Electronics, a global infusion pump systems manufacturer.

Apart from the acquisitions and mergers, other catalysts include the company’s receipt of 510(k) clearance from the FDA for a flow cytometer system with a leucocount reagent assay, which is used in residual white blood cell enumeration.

Becton, Dickinson also announced the global distribution of a complete line of products for mass spectrometry that provides high-speed and high-confidence identification of pathogens in clinical laboratories. This is a critical first step in the fight against antimicrobial resistance. The company’s mass spectrometry solutions suite includes MBT Biotargets and MBT Sepsityper as well as standard reagents and other products.

Further, Becton, Dickinson’s focus on geographical expansion in overseas markets like India, China, Brazil and Turkey is boosting market sentiments for the share.

Key Picks

A few better-ranked stocks in the broader medical sector are Mesa Laboratories, Inc. MLAB and Edap Tms S.a. EDAP. Notably, both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mesa Laboratories has a positive earnings surprise of 2.84% for the last four quarters. Notably, the stock represents an impressive one-year return of 15.3%.

Edap Tms has a positive return of 26% for the last three months. The company posted a solid earnings surprise of 533.3% in the last reported quarter.

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