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Can BD Medical Drive Becton, Dickinson's (BDX) Q3 Earnings?

Zacks Equity Research

Becton, Dickinson and Company’s BDX, popularly known as BD, third-quarter fiscal 2019 results are scheduled to release on Aug 6, 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.

BD has a positive earnings surprise of 0.8% for the last reported quarter and 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 $3.05, suggesting a year-over-year decline of 4.8%. The same for revenues stands at $4.35 billion, indicating an increase of 1.6%.

Becton, Dickinson and Company Price and EPS Surprise

 

Becton, Dickinson and Company Price and EPS Surprise

Becton, Dickinson and Company price-eps-surprise | Becton, Dickinson and Company Quote

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

BD Medical Likely to Drive Q3 Earnings

BD Medical, one of the major revenue drivers for the company, is expected to drive third-quarter results. The segment is likely to benefit from 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.

It is encouraging to note that for the third quarter, the Zacks Consensus Estimate for the segment’s revenues is pegged at $2.31 billion, suggesting a rise of 2.7% year over year.

Management expects to have gained from continued momentum in Medication Management Systems and Medication Delivery Systems driven by its leading vascular access portfolio.

In fact, for fiscal 2019, BD expects the Medical segment to grow 5% to 6%.

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

The Zacks Consensus Estimate for Medical Surgical Systems’ fiscal third-quarter revenues stands at $993 million, calling for a year-over-year rise of 1.6%. The growth is expected to be driven by strength in vascular access and infusion disposables.

For Diabetes Care, the Zacks Consensus Estimate for third-quarter revenues stands at $278 million, suggesting a rise of 0.7% year over year. Steady uptake of the new pen needle Nano Pro is expected to have boosted results.

However, for Pharmaceutical Systems, the Zacks Consensus Estimate for third-quarter revenues is pinned at $381 million, suggesting a year-over-year drop of 0.5%. Timing of customer ordering patterns is likely to have impacted third-quarter results.

Other Factors at Play

Strong performance by the BD Interventional arm might reflect on its fiscal third-quarter results.

The Zacks Consensus Estimate for the unit’s third-quarter revenues stands at $972 million, calling for sequential growth of 0.9%.

Notably, the company’s recently-launched products such as the 4 French WavelinQ, Covera and Venovo under the segment have performed impressively. Also, BD received FDA clearance for the BD WavelinQ 4 French Endovascular AV Fistula System. Additionally, BD expects double-digit growth in China.

For Life Sciences too, BD has launched FACSDuet, a new automated flow cytometry sample preparation instrument with CVD IVD certification. However, the Zacks Consensus Estimate for the unit’s third-quarter revenues is pinned at $1.08 billion, suggesting a 0.2% decline from the year-ago quarter. Notably, management expects additional foreign exchange pressure in the remaining of fiscal 2019.

Moreover, the recent market reaction to the FDA letter regarding the DCB business is expected to build pressure on BD.

Despite these headwinds, we expect core segmental strength to have aided BD’s fiscal third-quarter results.

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. This is exactly the case here.

Earnings ESP: BD has an Earnings ESP of +0.55%. 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 #3 (Hold).

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

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as these also have the right combination of elements to post a beat this earnings season.

DENTSPLY SIRONA XRAY has an Earnings ESP of +6.95% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita DVA has an Earnings ESP of +14.10% and a Zacks Rank #1.

Allena Pharmaceuticals ALNA has an Earnings ESP of +7.55% and a Zacks Rank #3.

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