Becton Dickinson Remains Neutral - Analyst Blog
May 21 2012 - 10:45AM
Zacks
We reiterate our Neutral
recommendation on Becton, Dickinson and
Company (BDX). Earnings for the second quarter matched the
Zacks Consensus Estimate of $1.38. Becton, Dickinson recorded
second quarter revenues of $1,991 million, up 3.6% (or 4.6% in
constant currency) year over year, surpassing the Zacks Consensus
Estimate of $1,942 million.
The company is pursuing a number of
key product initiatives. It will launch several products before the
end of fiscal 2013.
Besides, Becton, Dickinson
favorably tweaked its guidance for the fiscal year on a currency
neutral basis. The prospects for safety needles are more upbeat in
Europe, than in the U.S. market, following the adoption of safety
standards. Next generation safety needles were recently
launched.
Becton, Dickinson maintains a focus
on geographical expansion into overseas markets, in particular the
emerging markets, which accounted for about 21.4% of revenues in
the second quarter of 2012 (growing at 10% year over year). Growth
in safety needles in emerging markets was a bright spot, which rose
26% year over year.
Cash flows, including fresh debt,
are being utilized for large stock repurchases. Moreover, the
company is engaged in operational enhancement and cost containment.
However, it suffers from a lack of near-term catalysts even though
it has undertaken several initiatives to bolster product
pipeline.
We remain cautious about Becton,
Dickinson due to the lack of major short-term catalysts. The rising
demand for safety-needle products (with higher price points and
margins) was the primary driver of the company’s past growth, which
is not expected to continue, given that the U.S. market is already
largely penetrated.
On the positive side, Becton,
Dickinson’s preeminent global healthcare products franchise is
partly insulated from volatile macroeconomic conditions and
structural deficiencies elsewhere in the healthcare delivery
field.
Becton, Dickinson faces a wide
range of competitors, including Baxter
International (BAX) in certain niches, in each of its
three business segments. We currently have a long-term Neutral
recommendation on the stock. The stock currently retains a Zacks #3
Rank, which translates into a short-term “Hold” recommendation.
BAXTER INTL (BAX): Free Stock Analysis Report
BECTON DICKINSO (BDX): Free Stock Analysis Report
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