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Becton Dickinson Expects Covid Testing Sales to Hit $1.5 Billion

·3 min read

- By Barry Cohen

When it comes to Covid-19, Becton, Dickinson and Co. (NYSE:BDX) hasn't gained the attention of vaccine developers like Pfizer Inc. (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ), nor those companies with treatments like Gilead Sciences Inc. (NASDAQ:GILD). But the New Jersey-based medical device company has hardly been sitting on the sidelines.

BD, as it is also known, expects to capture about $1.5 billion in sales from its Covid diagnostic test in 2021, most of it coming in the first half of the year, CEO Thomas Polen told analysts in a conference call on Nov. 5 following the release of fourth-quarter and year-end results.

The company's Veritor Covid test can be done using a portable device and does not require a lab. It has been available in the U.S. since July through an emergency use authorization by the Food and Drug Administration.

Reuters reported Covid testing helped BD earn more than $440 million in the fourth quarter, and the company said there is a higher likelihood for testing to continue into fiscal 2022. The company plans to produce 12 million tests monthly by next March.

Becton, Dickinson's stock has been a steady performer for the most part. At just over $242, the shares are trading about midway between their 52-week high and low. During the past five years, the stock has gained nearly 68%.

Becton Dickinson Expects Covid Testing Sales to Hit $1.5 Billion
Becton Dickinson Expects Covid Testing Sales to Hit $1.5 Billion

CNN Money reported that among 17 polled investment analysts, BD shares are rated a buy, with a median target price of $272.50.

Those investors who think following the moves of hedge funds is a good strategy will be encouraged that the so-called "smart money" is growing more bullish about Becton. The number of hedge fund positions in the stock currently is 62, an all-time high according to Company News HQ.

For those investors looking for yield, BD is among the 25 companies on the list of Dividend Aristocrats. In these days of minuscule interest rates, the company's dividend returns a respectable 1.38%. The company has increased its dividend for 48 consecutive years.

BD recently announced it was planning to spend $1.2 billion to expand production of pre-fillable syringes, a technology it developed and is key to the worldwide Covid vaccine rollout. The expensive project will boost the company's manufacturing capacity and upgrade production technology for pre-fillable syringes and advanced drug delivery systems.

While Covid has giveth, it has also taken away. In the third quarter, the pandemic impact wiped $600 million from the company's top line, although things improved in the final three months of the year as gross revenues were $4.8 billion, up 4.4% from the same period in 2019. In the fourth quarter, Polen reported Covid testing sales offset a drop in revenue from medical products, which were impacted by declines in hospital stays, surgeries and routine lab testing.

For the fourth quarter, adjusted earnings were $2.79 per share, beating the Zacks consensus estimate by 11.6%. However, earnings per share dropped 15.7% on a year-over-year basis. For fiscal 2020, adjusted earnings were $10.20, again beating the Zacks estimate but dropping 12.7% year over year.

For 2021, the company expects revenue growth in the high single to low double digits with earnings per share ranging from $12.40 to $12.60.

Disclosure: The author holds positions in Pfizer, Johnson & Johnson and Gilead Sciences.

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This article first appeared on GuruFocus.