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Can BD Medical Drive Becton, Dickinson's (BDX) Q2 Earnings?

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Becton, Dickinson and Company’s (BDX - Free Report) , popularly known as BD, second-quarter fiscal 2018 results are scheduled to release on May 3, before the market opens. While the results are likely to show steady growth in the core BD Medical segment, rising revenues in other segments might also act as a driver.

In the first quarter, BD reported earnings of $2.48 per share, which beat the Zacks Consensus Estimate of $2.40. Adjusted earnings increased 3.9% at constant currency (cc) on a year-over-year basis. Revenues came in at $3.08 billion, beating the consensus estimate of $3.05 billion, showing a 5.4% rise from the year-ago quarter.

For the second quarter, the Zacks Consensus Estimate for earnings is pegged at $2.61, reflecting year-over-year growth of 13.5%. The same for revenues is pinned at $4.12 million, indicating 38.7% growth.

BD delivered an average positive earnings surprise of 2% for the trailing four quarters.

Let’s delve deeper.

BD Medical: A Key Growth Driver

In the last reported quarter, BD Medical accounted for a whopping 66.2% of the company’s total revenues. Revenues in the segment rose 1.9% to $2.04 billion at cc on a year-over-year basis. Per management, this includes a headwind of approximately 170 basis points (bps) from the US dispensing change. Furthermore, the added legacy of C.R. Bard has led to accelerated growth in the segment.

It is also encouraging to note that for the second quarter, the Zacks Consensus Estimate for the segment is at $2.13 billion, up 4.6% sequentially.

Medication and Procedural Solutions or MPS revenues grew 5% in the first quarter. For the second quarter, the Zacks Consensus Estimate is pegged at $936 million, up 1.2% sequentially. Growth is likely to be driven by continued strength in the pre-filled flush devices, infection prevention and surgical products.

Diabetes Care revenues grew 2.2% on growth in pen needles. Yet, the Zacks Consensus Estimate for the quarter is pinned at $262 million, down 5.4% sequentially.

At Pharmaceutical Systems, revenues grew 3.7% in the first quarter. The Zacks Consensus Estimate for the second quarter is $343 million, showing a 40% rise sequentially.

Revenues at Medication Management Solutions or MMS declined 3.4%, although, the Zacks Consensus Estimate is at $581 million, up 23.4% sequentially.

Other Factors at Play

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BD expects fiscal 2018 revenue growth in the range of 30-31% on a reported basis. However, revenues are expected to grow in the band of 4.5-5.5%.

The company expects adjusted earnings per share in the range of $10.85-$11.00, up from the previous range of $10.55-$10.65. The current range indicates growth of approximately 15% to 16% on a reported basis, or around 12% at cc.

For 2018, management expects BD Medical to grow between 4% and 5%. Life Sciences segment is expected to rise 4.5% to 5.5%, while growth in the new BD Interventional segment is anticipated between 5.5% and 6.5%.

Acquisitions & Divestitures

BD’s acquisition-driven strategy has been instrumental in driving growth. Recently, BD acquired C.R. Bard and per management, BD is on its way to become one of the biggest medical technology devices companies in the world with approximately $16 billion in annualized revenues. The closure of the takeover will lead to a third and new business segment — BD Interventional. BD’s collaborative moves with Fresenius Medical Care to provide sodium chloride saline to customers are also worth a mention.

Last year, BD announced that Merit Medical Systems has signed an agreement to acquire certain assets of the company.

BD Life Sciences

Revenues from BD Life Sciences totaled $1.05 billion in the fiscal first quarter, up 7.3% at cc from a year ago. The segment's performance was backed by strong numbers across the Biosciences, Diagnostic Systems and Preanalytical Systems units. The segment also saw solid growth outside the United States.

Recently, BD announced pre-market approval from the FDA for the BD Onclarity HPV assay. Per management, this is likely to boost the BD Diagnostics Systems.

The segment’s Zacks Consensus Estimate for the second quarter, is pinned at $1.06 billion, up 1% sequentially.

Our quantitative model predicts an earnings beat for BD this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates.

Zacks ESP: Earnings ESP for BD is +0.89%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BD carries a Zacks Rank #3. A favorable Zacks Rank increases the predictive power of ESP.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as they have the right combination of elements to post beats this earnings season.

Stryker Corp. (SYK - Free Report) has an Earnings ESP of +0.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #3.

Edwards Lifesciences (EW - Free Report) has an Earnings ESP of +1.28% and a Zacks Rank #3.

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