The growth in revenues over the years has been good. The stock has also delivered great returns for the investors. It recently made its high at $102 and has corrected slightly from there. BDX has appreciated by 32% over the last one year. The dividends have also been good with the average yield of 2% at a low payout of 25%. The net income has, however, been flat to negative during the last few quarters. In the last quarter, the revenues had grown by a modest 3-4%, but the net income had fallen by nearly 6%. The current valuations are reasonable with a modest trailing P/E of under 13. The debt on books is a little high, but the operating cash flows are good. The expectations regarding future growth are not too robust as the PEG of 1.86 (5 year expected) and the forward P/E of 15.27 (fye 30 September 2014) are high. Further growth in the stock will depend on the growth in fundamentals. New product launches and innovative new technologies are the key to success of pharma / medical devices companies. Building an IPR portfolio around the proprietary technology helps in increasing sales and generation of licensing revenue streams. Even small medical device companies like PLC Systems (PLCSF) are working towards obtaining patents for their proprietary technology to strengthen their position in the market place. PLC Systems has recently obtained several patents for its single proprietary product RenalGuard in US and Europe. For BDX, $90-93 can be a good entry point. Presuming that the markets remain stable to positive after a correction, one can expect decent appreciation in the stock. However, the fundamentals have to remain strong and the rate of growth needs to increase. After such a good appreciation over the last few months, slippages can lead to some profit booking.
Great analysis! The problem is that the share price is set by Wall Street manipulating the small investor who usually doesn't understand a think you wrote. I maintain that when the $2 from the Corning sale goes away from the balance sheet in two quarters, the stock will be back to the high $70's or low $80's. That will be the time to buy back for the great dividends.