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Can BD Medical Drive Becton, Dickinson's (BDX) Q2 Earnings?

Zacks Equity Research

Becton, Dickinson and Company’s BDX, popularly known as BD, second-quarter fiscal 2019 results are scheduled to release on May 9, before market opens. While the results are likely to show steady growth in the core BD Medical segment, weakness in BD Life Sciences may partially mar results.

 

Notably, BD has a positive average surprise of 1% in the trailing four quarters.

 

Which Way Are Estimates Treading?

 

For the quarter to be reported, the Zacks Consensus Estimate for BD’s earnings per share is pegged at $2.59, suggesting a year-over-year decline of 2.3%. The same for revenues stands at $4.24 billion, indicating an increase of 0.5%.

 

Let’s see how things are shaping up prior to the earnings release.

 

BD Medical Likely to Drive Q2 Earnings

 

BD Medical, one of the major revenue drivers of the company, is expected to drive fiscal second-quarter results. Strong year-over-year growth in revenues from needles, syringes and intravenous catheters for medication delivery, prefilled IV flush syringes, syringes and pen needles for diabetes care and others are likely to boost the segment.

 

It is encouraging to note that for the second quarter, the Zacks Consensus Estimate for the segment’s revenues is pegged at $2.21 billion, suggesting a rise of 1.7% year over year.

 

Notably, BD recently launched two cloud-based applications, BD HealthSight Data Manager and BD HealthSight Diversion Analytics, which are likely to contribute to the segment’s results.

 

Additionally, management expects the sub-segments ??? Medical Surgical Solutions, Pharmaceutical Systems and Diabetes Care — to drive the unit.

 

The Zacks Consensus Estimate for Medical Surgical Solutions’ fiscal second-quarter revenues stands at $975 million, calling for a year-over-year rise of 1.8%. The growth is expected to be driven by strength in vascular access and infusion disposables.

 

For Pharmaceutical Systems, the Zacks Consensus Estimate for second-quarter revenues is pinned at $344 million, suggesting a year-over-year rise of 12.8%.

 

Management expects strong demand for core products and increased customer ordering.

For Diabetes Care, the Zacks Consensus Estimate for second-quarter revenues stands at $262 million, suggesting a drop of 8.7% year over year.

 

Timing of orders in the United States and the EMEA is likely to affect sales in the sub-segment.

Becton, Dickinson and Company Price and EPS Surprise

 

Becton, Dickinson and Company Price and EPS Surprise | Becton, Dickinson and Company Quote

Other Factors at Play

 

BD has seen a slew of developments lately, which might reflect on its fiscal second-quarter results.

 

In the BD Life Sciences segment, the company received FDA clearance for the BD Phoenix CPO Detect test and the BD MAX Enteric Viral Panel which will broaden the suite of diagnostic solutions offered by the unit.

 

However, the Zacks Consensus Estimate for the unit’s second-quarter revenues stands at $1.06 billion, indicating a year-over-year decline of 3.3%.

 

BD also launched WavelinQ, a solution that provides a minimally-invasive nonsurgical option for creating critical AV fistulas for hemodialysis procedures. This is expected to boost the BD Interventional segment.

 

Notably, the Zacks Consensus Estimate for the unit’s second-quarter revenues is pegged at $974 million, mirroring a sequential rise of 0.4%.

 

However, BD expects unfavorable foreign currency movements to severely impact fiscal second-quarter results. This apart, BD expects unfavorable impact from raw materials and tariffs to add to the woes.

 

Reflective of these, management expects revenue growth to be below the full-year guidance range by about 100 basis points.

 

Adjusted earnings per share in the quarter to be reported are expected between $2.50 and $2.60.

 

Lastly, a normal flu season is expected to pose a 1% headwind in fiscal 2019, most of which will be pronounced in the fiscal second quarter.

 

What Does Our Model Say?

 

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. However, this is not the case here.

 

Earnings ESP: BD has an Earnings ESP of -1.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Zacks Rank: BD carries a Zacks Rank #4 (Sell).

 

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.

 

Stocks Worth a Look

 

Here are a few stocks that are likely to post a beat this earnings season.

 

Cardinal Health CAH has an Earnings ESP of +1.13% and a Zacks Rank #3. You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

 

Aurora Cannabis ACB has an Earnings ESP of +55.88% and a Zacks Rank #3.

 

HEXO Corp. HEXO has an Earnings ESP of +2.78% and a Zacks Rank #3.

 

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