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BD Gains From Solid Global Base, Headwinds Anticipated

Zacks Equity Research

On Feb 6, we issued an updated research report on Becton, Dickinson and Company BDX, also known as BD. While solid developments and a strong global foothold boost the stock, a few headwinds are anticipated in fiscal 2019.

The stock currently carries a Zacks Rank #3 (Hold).

Price Performance

In the past year, BD’s shares have rallied 15% against the industry’s decline of 0.4%. The current level also compares favorably with the S&P 500’s rally of 6.5%.

Over the past 60 days, the Zacks Consensus Estimate for the company’s fiscal third-quarter earnings per share moved up 0.6% to $3.25.

Becton, Dickinson and Company Price and Consensus

 

Becton, Dickinson and Company Price and Consensus | Becton, Dickinson and Company Quote

What’s Favoring BD?

In recent times, the New Jersey-based MedTech giant saw a slew of developments.

In the recently-reported first quarter of fiscal 2019, BD announced the launch of two cloud-based applications, BD HealthSight Data Manager and BD HealthSight Diversion Analytics, which enable an enterprise-wide connected medication management system. Notably, both form part of the BD HealthSight platform.

Moreover, in the BD Interventional segment, WavelinQ was made available for sale in the United States in the fiscal first quarter. This product provides a minimally-invasive nonsurgical option for creating critical AV fistulas for hemodialysis procedures.

Last month, BD announced the FDA approval of its second-generation BD Nano pen needle for more reliable subcutaneous injection depth. Last December, BD received regulatory approval for the BD MAX enteric viral panel, a molecular diagnostic test.

BD is focused on geographical expansion into overseas markets.

Notably, in first-quarter fiscal 2019, BD delivered strong sales internationally, which totaled $1.77 billion, up 24.6% from the year-ago quarter and 4.1% at constant currency (cc). Per management, overseas revenue growth was backed by strong performance by all three segments in the quarter.

China saw growth of 13.3% from the year-ago quarter, reflecting strength in the Life Science and Interventional segments. The core BD Medical segment excelled in China.

For fiscal 2019, BD expects growth of about 10% in emerging economies along with low double-digit growth in China.

Deterrents

Management at BD expects a few headwinds to mar prospects in fiscal 2019.

BD expects raw material pricing pressure, which increased in 2018, to accelerate into fiscal 2019, primarily due to resin price increases owing to a supply-constrained market. Although pressure from raw materials partially eased in the fiscal first quarter, management expects a 2% headwind from it in fiscal 2019.

Additionally, BD expects a 1% headwind from tariffs in 2019. Customer ordering patterns are also expected to negatively impact fiscal second-quarter results.

Key Picks

A few better-ranked stocks in the broader medical space are Penumbra, Inc. PEN, Wright Medical Group N.V. WMGI and DexCom. Inc. DXCM. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra’s long-term earnings growth rate is expected at 20%.

Wright Medical’s long-term earnings growth rate is expected at 11%.

DexCom’s next-quarter earnings per share is projected to grow at 56.3%.

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