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Becton, Dickinson (BDX) Q2 Earnings Beat, Revenues Fall Y/Y

Zacks Equity Research

Becton, Dickinson and Company BDX posted second-quarter fiscal 2019 earnings per share (EPS) of $2.59, beating the Zacks Consensus Estimate of $2.57. The bottom line however dipped 2.3% on a year-over-year basis but rose 7.2% at constant currency (cc).

Becton Dickinson, also known as BD, raked in revenues of $4.20 billion, missing the Zacks Consensus Estimate of $4.24 billion. The reported figure fell 0.6% from the year-ago quarter. At cc, revenues rose 3.4%.

Segment Details

BD Medical

In the quarter under review, the Zacks Rank #4 (Sell) company posted worldwide revenues of $2.18 billion, up 0.4% from the year-ago quarter and 3.3% at cc, primarily due to the acquisition of C. R. Bard. Per management, the segment's results were driven by strong performance in the Medication Management Solutions unit.

Becton, Dickinson and Company Price, Consensus and EPS Surprise

 

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

BD Life Sciences

Worldwide revenues in the segment totaled $1.05 billion, down 4.2% year over year and 0.9% at cc. Revenues were primarily impacted by sluggishness in all three sub-units — Preanalytical Systems, Diagnostic Systems and Biosciences.

BD Interventional

This segment posted worldwide revenues of $0.96 billion, up 1.2% from the year-ago quarter. At cc, revenues grew 2.9%. The segment's results reflect strong performance by the Peripheral Intervention and Urology and Critical Care sub-units.

Geographic Results

US

In the fiscal second quarter, revenues in the United States inched up 0.7% to $2.34 billion. Revenues grew 6% at cc. Per management, growth in the United States was driven by performance of the BD Medical and BD Interventional segments.

International

Revenues outside the United States grossed $1.85 billion, down 2.3% from the year-ago quarter, thanks to the acquisition of C. R. Bard. At cc, the segment grew 3.8%. Per management, international revenue growth in the second quarter was strong in China and EMEA.

Margin Analysis

In the quarter, gross profit amounted to $1.97 billion, up 22.9% from the prior-year quarter tally. Gross margin was 47.1%, up significantly from the prior-year quarter’s 38%.

Operating income in the quarter grossed $136 million, down 26.9% from the year-ago quarter. As a percentage of revenues, operating margin in the quarter was 3.2%, down 120 basis points year over year.

Adjusted operating income summed $633 million, up significantly from the year-ago figure of $291 million.

Guidance

For 2019, the company expects revenue growth of 8-9%, compared to 8.5-9.5%, communicated previously. At cc, revenues are expected to increase 5-6%. The Zacks Consensus Estimate stands at $17.42 billion.

Adjusted EPS is expected between $11.65 and $11.75, indicating growth of 12% at cc. This is down from the previously stated range of 13-14%, owing to recent regulatory and market pressure related to paclitaxel-coated devices. The Zacks Consensus Estimate is pegged at $12.07, much above the projected range.

Summing Up

BD exited the fiscal second quarter on a mixed note. Strong performance by the core BD Medical and Interventional segments buoys optimism. Domestic revenues increased year over year in the quarter under review, driven by segmental strength. Notably, a series of product launches and regulatory approvals have boosted the stock. Growth in China and EMEA is a positive. Expansion in gross margin is also heartening.

On the flip side, sluggishness in the core Life Sciences unit raises concern. International sales also dipped in the quarter. Contraction in operating margins in the quarter is also worrisome. A weak EPS view for 2019 adds to the woes. Management expects unfavorable foreign currency to partially mar BD’s prospects in fiscal 2019. Stiff competition in the MedTech space adds to the woes.

Earnings of MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, DENTSPLY SIRONA XRAY and CONMED Corporation CNMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the consensus estimate.

DENTSPLY reported adjusted EPS of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues came in at $946.2 million and surpassed the Zacks Consensus Estimate of $917.1 million.

CONMED posted first-quarter 2019 adjusted EPS of 57 cents, which beat the Zacks Consensus Estimate of 54 cents. Revenues were $218.4 million, surpassing the consensus estimate of $213 million.

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