Becton Dickinson (BDX) Up 2.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Becton Dickinson (BDX). Shares have added about 2.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Becton Dickinson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Becton, Dickinson Beats on Q4 Earnings, FY20 Guidance Solid

BD reported fourth-quarter fiscal 2019 earnings per share (EPS) of $3.31, which beat the Zacks Consensus Estimate by a penny. The bottom line also improved 13% on a year-over-year basis and rose 12.3% at cc.

The company raked in revenues of $4.58 billion, surpassing the Zacks Consensus Estimate of $4.57 billion. The reported figure increased 4.1% from the year-ago quarter. At cc, revenues rose 6.2%.

Segment Details

BD Medical

In the quarter under review, the company reported worldwide revenues of $2.44 billion, up 3.9% from the year-ago quarter and 5.3% at cc. Per management, the segment's results were driven by performance in the Medication Management Solutions, Medication Delivery Solutions and Pharmaceutical Systems units.

BD Life Sciences

Worldwide revenues in the segment totaled $1.13 billion, up 2.3% year over year and 6.9% at cc. Per management, the upside was driven by solid performance in the Diagnostic Systems and Biosciences units.

BD Interventional

This segment generated worldwide revenues of $1.01 billion, up 6.9% from the year-ago quarter. At cc, revenues grew 7.7% on strong performance by the Urology and Critical Care and Surgery sub-units.

Geographic Results

US

In the fiscal fourth quarter, revenues in the United States improved 4.6% to $2.56 billion. Revenues grew 4.9% at cc. Per management, growth in the United States was driven by good performance by the BD Medical, BD Life Sciences and the Surgery and Urology and Critical Care units within the BD Interventional segment.

International

Revenues outside the United States grossed $2.02 billion, up 3.5% from the year-ago quarter. At cc, the segment grew 7.9%. Per management, international revenue growth in the fourth quarter was strong in APAC and EMEA.

Margin Analysis

In the quarter, gross profit amounted to $2.27 billion, up 8.3% from the prior-year quarter tally. Gross margin was 49.4%, up 190 bps from the prior-year quarter.

Operating income in the quarter grossed $111 million, down significantly from the year-ago quarter’s figure of $576 million. As a percentage of revenues, operating margin in the quarter was 2.4%, significantly down from year-ago quarter’s 13.1%.

Adjusted operating income amounted to $902 million, up 26.2% from the year-ago figure.

Guidance

The company expects fiscal 2020 revenues to increase 4-4.5% year over year and 5-5.5% at cc.

Adjusted EPS is expected between $12.50 and $12.65, indicating growth of 7-8.5% from fiscal 2019. At cc, growth is expected between 9.5% and 11%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -10.74% due to these changes.

VGM Scores

Currently, Becton Dickinson has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Becton Dickinson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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