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Here's Why You Should Hold Becton, Dickinson Stock for Now

Zacks Equity Research

Becton, Dickinson and Company BDX, also known as BD, is expected to benefit from a slew of developments and a strong guidance for fiscal 2019. However, raw material pricing pressure is a headwind.

The stock currently has a Zacks Rank #3 (Hold).

Price Performance

Shares of BD have rallied 14.3%, comparing favorably with the industry’s rise of 3.3% in a year’s time. The current level is also better than the S&P 500 index’s 8% rally.

What’s Deterring the Stock?

BD expects raw material pricing pressure, which increased in 2018, to accelerate in fiscal 2019 on resin price increases owing to a supply-constrained market. Although pressure from raw materials partially eased in the fiscal first quarter, management expects a 2% headwind from it in fiscal 2019.

Additionally, BD expects a 1% tariff headwind in 2019. Customer ordering patterns are also expected to affect second-quarter results.

Why Should You Retain BD?

BD has reiterated its guidance for fiscal 2019.

On a reported basis, BD continues to expect fiscal 2019 revenue growth of 8.5-9.5%, primarily owing to the C. R. Bard acquisition. At cc, the same metric is anticipated to increase 5-6%.

Fiscal 2019 adjusted earnings per share are projected between $12.05 and $12.15, reflecting growth of 13-14% at cc and 10% from fiscal 2018. The midpoint of the latest guidance of $12.10 is slightly above the Zacks Consensus Estimate of $12.09.

The company has also seen a slew of developments in recent times.

Last month, BD announced the CE-IVD certification for the BD FACSDuet automated flow cytometry system. Notably, the instrument enables clinical laboratories to improve efficiency by reducing errors.

Moreover, the company said that it is optimistic about its LUTONIX drug-coated balloon despite the questions raised by the FDA. (Read More: BD Remains Confident About LUTONIX DCB Despite FDA Letter)

Additionally, BD announced the FDA premarket approval for its Venovo venous stent device, the first one indicated to treat iliofemoral venous occlusive disease. (Read More: BD's Venovo Gets FDA Nod, Interventional Arm to Get a Boost)

In recent times, BD announced the launch of two cloud-based applications, BD HealthSight Data Manager and BD HealthSight Diversion Analytics, which enable an enterprise-wide connected medication management system. Notably, both form part of the BD HealthSight platform.

Becton, Dickinson and Company Price and Consensus


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

Which Way Are Estimates Headed?

For the fiscal second quarter, the Zacks Consensus Estimate for earnings is pegged at $2.59, reflecting a decline of 2.3% on a year-over-year basis. The same for revenues is pinned at $4.22 billion, reflecting growth of 0.03% year over year.


BD seems to be positioned for growth, courtesy of a plethora of positive developments amid raw material pricing pressure. The company's long-term earnings growth rate of 11.7% supports our view.

Key Picks

A few better-ranked stocks in the broader medical space are Varian Medical Systems VAR, Masimo Corporation MASI and Penumbra, Inc. PEN, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Varian Medical’s long-term earnings growth is projected at 8%.

Masimo’s long-term earnings are expected to grow 15.6%.

Penumbra’s long-term earnings growth rate is estimated at 20.9%.

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