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Becton, Dickinson Gains on Strong Q1 Results & Acquisitions


On Feb 9, we issued an updated research report on Becton, Dickinson and Company BDX, popularly known as BD.

The stock carries a Zacks Rank #2 (Buy).

BD’s focus on expanding into overseas emerging markets, product launches and acquisition-driven strategies are significant growth catalysts. Meanwhile, the company ended the first quarter of fiscal 2018 on an impressive note, beating the Zacks Consensus Estimate for both the counts. A strong guidance for fiscal 2018 instills confidence in investors.

BD has been banking on solid segmental growth of late. In the first quarter of fiscal 2018, the BD Medical segment generated revenues of $2.04 billion, up 1.9% at constant currency (cc) on a year-over-year basis. The BD Life Sciences segment generated revenues of $1.05 billion, up 7.3% at cc from the year-ago quarter. As a result, the company reported net revenues of $3.08 billion, up 5.4% from the prior-year quarter or 3.7% at cc.

Strategic acquisitions have also been a key catalyst for BD. Recently, the company acquired C.R. Bard. Per management, BD is on its way to become one of the biggest medical-technology devices company in the world with approximately $16 billion in annualized revenues.

Including the accretion from C. R. Bard acquisition, BD expects fiscal 2018 revenues to increase to the range of 30-31% on a reported basis. However, revenues are expected to grow in the range of 4.5-5.5% at cc. Notably, revenues are likely to be affected by the change in the U.S. dispensing business model.

Becton, Dickinson and Company Price

The company expects adjusted earnings per share in the range of $10.85-$11.00, up from the previous range of $10.55-$10.65. The current range indicates growth of approximately 15-16% on a reported basis or approximately 12% at cc.

BD’s collaborative move with Fresenius Medical Care FMS to provide sodium chloride saline to customers is also noteworthy. BD enjoys a strong presence in the instrument market and the buyout will boost its competitive position in the sequencing market. The company is expected to continue to pursue strategic acquisitions that will boost long-term growth prospects.

BD announced an agreement with Italy-based Euroclone for the development and global distribution of molecular assays. The molecular assays are exclusively formulated to detect sexually-transmitted pathogens. BD and Euroclone plan to launch these molecular assays outside the United States from 2018.

Favorable Price Performance

In the last year, BD has outperformed the broader industry in terms of price. The company’s shares have returned 22.5%, comparing favorably with the broader industry’s rally of 12.5%.

Other Key Picks

A few other top-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO and PerkinElmer PKI.

Bio-Rad Laboratories has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has a long-term expected earnings growth rate of 25%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

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