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Can BD Medical Drive Becton, Dickinson's (BDX) Q3 Earnings?

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Becton, Dickinson and Company’s (BDX - Free Report) , popularly known as BD, third-quarter fiscal 2018 results are scheduled to release on Aug 2, before the market opens. While the results are likely to show steady growth in the core BD Medical segment, decline in other segments are apprehended.

In the last reported quarter, BD reported earnings of $2.65 per share which beat the Zacks Consensus Estimate of $2.61. Earnings improved 7.8% at constant currency (cc). The New Jersey-based medical technology company posted revenues worth $4.22 billion, surpassing the Zacks Consensus Estimate of $4.12 billion. Revenues rose 5.7% at cc.

For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at $2.85, reflecting year-over-year growth of 15.9%. The same for revenues is pinned at $4.24 billion, showing year-over-year rise of 39.8%.

BD has an average positive earnings surprise of 1.6% for the trailing four quarters.

Let’s delve deeper.

BD Medical to Drive Q3 Earnings

In the last reported quarter, BD Medical accounted for 51.4% of the company’s net revenues. The segment posted worldwide revenues of $2.17 billion, up 4.2% at cc.

It is also encouraging to note that for the third quarter, the Zacks Consensus Estimate for the segment is at $2.23 billion, up 9.5% from the year-ago quarter.

Medication Surgical Systems revenues grew 45.9% in the second quarter. The Zacks Consensus Estimate for third-quarter revenues is pegged at $960 million, up 10.3% on a year-over-year basis.

Revenues at Medication Management Solutions declined 0.7% in the last reported quarter. Yet the Zacks Consensus Estimate is pinned at $594 million, calling for a sequential improvement of 2.2%. Recently, BD collaborated with Indiana-based Helmer Scientific to introduce a refrigerated solution using its new Pyxis ES refrigerator. (Read more:Becton, Dickinson Ties Up With Helmer Scientific to Boost MMS)

Diabetes Care revenues grew 5.8% in the second quarter. The Zacks Consensus Estimate for the third quarter stands at $284 million, showing a rise of 8% from a year ago.

At Pharmaceutical Systems, revenues grew 7.9% in the second quarter. The Zacks Consensus Estimate for the third quarter is pinned at $383 million, up 9.4% on a year-over-year basis.

Other Factors at Play

BD Life Sciences

This segment provides products for the safe collection and transport of diagnostics specimens. In the last reported quarter, it accounted for 28% of net revenues. The segment grew 7.3% at cc to $1.18 billion.

For the quarter to be reported, the Zacks Consensus Estimate for the segment’s revenues is pegged at $1.06 billion, down 3.6% sequentially.

Raised Guidance

For fiscal 2018, BD expects adjusted earnings per share within $10.9-$11.05 on an increase in the estimated benefit from foreign currency. This represents growth of approximately 15-16.5% over fiscal 2017. Notably, the Zacks Consensus Estimate for earnings per share of $10.99 lies within the range.

The company raised the revenue growth guidance for fiscal 2018 to 5-5.5%, which is also at a high end of the previous guidance.

Notable Acquisitions

Earlier this year, BD completed the acquisition of C.R. Bard. The company further established a new segment — BD Interventional — in which Bard has been integrated. In the last reported quarter, revenues from Bard grew 8.5%. Furthermore, total revenues surged 42.2% on the acquisition of Bard. We expect the same trend to continue in the quarter to be reported.

Recently, BD completed the acquisition of Texas-based TVA Medical, which is likely to boost the company’s core Medical unit. However, per management, the transaction is not expected to be accretive to BD’s fiscal 2018 or 2019 results. (Read more: BD Buys TVA Medical, To Provide Minimally Invasive Procedure)

What Our Model Predicts

Our quantitative model does not conclusively show 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. It can be illustrated below:

Earnings ESP: Earnings ESP for BD is 0.00%. 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.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Edwards Lifesciences Corporation (EW - Free Report) has an Earnings ESP of +0.59% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Teleflex Incorporated (TFX - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #3.

PerkinElmer, Inc. has an Earnings ESP of +1.03% and a Zacks Rank #3.

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