BD (BDX) Gears Up for Q1 Earnings: What's in the Offing?
Becton Dickinson and Company BDX, popularly known as BD, is scheduled to report first-quarter fiscal 2023 results on Feb 2, before market open.
In the last-reported quarter, the company’s earnings of $2.75 per share surpassed the Zacks Consensus Estimate by 0.7%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 10.4%, on average.
Let’s see how things have shaped up for BDX prior to this announcement:
Factors to Note
BD Life Sciences
On the fiscal 2022 fourth-quarter earnings call in November 2022, BD confirmed that it continued to witness lower COVID-only testing revenues, which led to a decline in the company’s Life Sciences segment. However, excluding COVID-only testing, an uptick in the Life Sciences segment’s base revenues was solid, with strong growth across both Integrated Diagnostic Solutions (IDS) and Biosciences (BDB) business units, despite supply constraints.
Strength in IDS reflected strong base business revenue growth, driven by leveraging its increased BD MAX installed base, availability of its specimen management products and incremental clinical microbiology instrument installations. The Life Sciences segment’s BDB unit has also been recording solid demand for its FACSymphony A1/A5 SE analyzers and FACSymphony S6 sorter over the past few months. These trends are likely to have continued in the first quarter of fiscal 2023, thereby contributing to the strength in base business despite the expected continued fall in COVID-only testing revenues. This is likely to have significantly driven up the segmental revenues.
Other notable products that are likely to have continued to witness robust product adoption in the fiscal first quarter include BD Research Cloud and CerTest VIASURE Monkeypox molecular research use only assay (BD and CerTest Biotec’s newly developed molecular polymerase chain reaction assay for the monkeypox virus).
In October 2022, BD announced a co-exclusive commercial agreement with Magnolia Medical Technologies, Inc., aimed at helping U.S. hospitals reduce blood culture contamination to help improve testing accuracy and ultimately improve clinical outcomes. In August, BD announced a worldwide commercial collaboration agreement with Accelerate Diagnostics, Inc. The same month, BD entered into a collaboration with Laboratory Corporation of America Holdings or LabCorp. These strategic tie-ups are likely to have aided BD in the fiscal first quarter, thereby driving up revenues.
However, the continued decline in COVID-only testing revenues is likely to have weighed on BD’s Life Sciences segmental revenues in the first quarter of fiscal 2023.
The Zacks Consensus Estimate for fiscal first-quarter BD Life Sciences revenues is pegged at $1.28 billion, suggesting a decline of 13.6% from the year-ago quarter’s reported figure.
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This segment continued to witness a strong worldwide performance in Advanced Repair and Reconstruction in the fourth quarter of fiscal 2022, driven by the continued strong market adoption of Phasix hernia resorbable scaffold. Biosurgery also performed well during the last-reported quarter.
Revenues in Peripheral Intervention were also strong, driven by biopsy needles and filters, continued global penetration of Rotarex and the acquisition of Venclose, which is expanding BD’s focus across chronic disease settings. These trends are likely to have been witnessed in the fiscal first quarter, thereby significantly pushing up the segmental revenues.
Robust Urology and Critical Care revenues were driven by continued strong demand for its chronic female incontinence products with PureWick in acute care and alternative care settings. This is likely to have also contributed to the segmental revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal first-quarter BD Interventional revenues is pegged at $1.84 billion, suggesting a decline of 14.2% from the year-ago quarter’s reported figure.
Other Factors to Note
BD is likely to have witnessed continued momentum in its Medical segment, attributable to strong demand for the company’s durable core products, driven by competitive gains in catheters and vascular care devices.
BD launched a next-generation glass prefillable syringe — BD Effivax Glass Prefillable Syringe — in September 2022. The product is likely to have witnessed robust adoption in recent months, thereby driving up revenues in the to-be-reported quarter.
However, the current unstable macroeconomic business environment, resulting from the supply-chain constraints and inflationary pressures, is likely to have weighed on the company’s fiscal first-quarter revenues, raising our apprehension.
The Estimate Picture
For first-quarter fiscal 2023, the Zacks Consensus Estimate of $4.54 billion for total revenues implies a decline of 9.1% from the prior-year quarter’s reported figure.
This compares to our revenue estimate of $4.51 billion for the quarter.
The consensus estimate for earnings per share (EPS) is pegged at $2.67, indicating a decline of 26.7% from the prior-year period’s reported number.
We estimate the fiscal first-quarter adjusted EPS to be $2.64.
What Our Model Suggests
Our proven model predicts an earnings beat for BD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: BD has an Earnings ESP of +0.26%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle:
McKesson Corporation MCK has an Earnings ESP of +0.21% and a Zacks Rank of 2. MCK has an estimated long-term growth rate of 10.1%.
McKesson’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 4.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health, Inc. CAH has an Earnings ESP of +5.75% and is a Zacks #2 Rank stock. CAH has an estimated long-term growth rate of 11.7%.
Cardinal Health’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 3%.
Hologic, Inc. HOLX has an Earnings ESP of +5.05% and carries a Zacks Rank of 2 at present. HOLX has an estimated long-term growth rate of 15.2%.
Hologic’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 46.1%.
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