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Why Is Becton Dickinson (BDX) Up 3.7% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Becton Dickinson (BDX). Shares have added about 3.7% 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 the most recent earnings report in order to get a better handle on the important drivers.

Becton, Dickinson Q2 Earnings Beat, Revenues Fall Y/Y

BD 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).

The company 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.

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. 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%.

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.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -6.56% due to these changes.

VGM Scores

At this time, Becton Dickinson has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Becton Dickinson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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