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Leading medical devices maker, CR Bard Inc. (BCR - Analyst Report) is slated to announce its third quarter 2012 results after the closing bell on Tuesday, October 23. The current Zacks Consensus Estimate for the third quarter is $1.63, representing an estimated year-over-year growth of 0.74%.

Second Quarter Recap

Bard’s second-quarter 2012 adjusted earnings per share of $1.62 lagged the Zacks Consensus Estimate of $1.64, but surpassed the year-ago earnings of $1.57 per share. In the reported quarter, profits were $133.9 million (or $1.54 a share) versus a net loss of $47.8 million (or loss of 55 cents) in the year-ago quarter. Moderate revenue growth and lower operating expenses contributed to higher net income.

Revenues increased 2% (up 4% in constant currency) year over year to $742.6 million, but fell short of the Zacks Consensus Estimate of $755 million. Year-over-year growth was driven by balanced growth across the company’s Vascular, Urology and Oncology segments.

On a geographic basis, revenues in the U.S. and international markets grew 2% and 3% (up 8% in constant currency) to $490 million and $252.6 million, respectively.

Revenues from the core Vascular segment increased 3% (up 6% in constant currency) year over year to $221.3 million led by the ClearStream acquisition. Within Vascular, endovascular sales grew 9% led by the ClearStream acquisition. Biopsy sales were flat year over year due to prevailing softness in the U.S. economy. Electrophysiology (“EP”) revenues dropped 2% due to lower EP LabSystem sales (down 1%) along with declining disposable EP sales (down 2%) and surgical graft sales (down 7%).

Sales from the Urology division increased 3% (up 5% in constant currency) to $188.8 million led by the company’s latest targeted temperature management products. The company’s Oncology segment reported revenue growth of 3% (up 4% in constant currency) year over year to $198.9 million. Sales from Surgical Specialties business were $111.4 million, flat year over year (up 2% in constant currency).

Estimate Revisions Trend

Agreement

Estimates for the third quarter did not demonstrate any activity over the past week and month. The past 7 and 30 days have seen none of the 15 estimates change in either direction for the quarter.

The past 7 days have seen one of the 16 estimates fall for the full year 2012, while none moved in the opposite direction. In the past 30 days, only one out of the 16 estimates moved downwards, with no upward revision.

Magnitude

The magnitude of revisions, for the forthcoming quarter, has hit a plateau over the last week and month. The estimate for 2012 has also not moved over the prior week and month.

Surprise History

With respect to earnings surprises, Bard has posted three positive surprises in the preceding four quarters, while it missed the Zacks Consensus Estimate once. The company produced an average positive earnings surprise of 0.94% over the last four quarters, implying that it has surpassed the Zacks Consensus Estimate by that measure. Third quarter earnings are also expected to meet expectations.

Our View

With a market cap of $8.47 billion, C.R. Bard is a well-diversified medical device company, providing a complete line of products to treat medical conditions through less invasive procedures in a cost-effective manner. The company aims to achieve long-term growth by focusing on business development, internal Research and Development (R&D) and strategic investment in higher growth markets.

Bard keeps introducing new products in the market at regular intervals. The company also has a reasonably strong pipeline along with a substantial number of projects in each business segment. Additionally, the company remains committed to delivering incremental returns to investors by leveraging its solid balance sheet, healthy free cash flow and earnings power.

However, increasing competition, fluctuating currency, pricing/volume pressure and an overall tough U.S. and European economy remain areas of concern. C.R. Bard faces strong competition from Boston Scientific Corporation (BSX - Analyst Report), and Johnson & Johnson (JNJ - Analyst Report).

We expect the company to provide some light on the pricing/volume and capital spending trend as well as an update on its pipeline and guidance for the fourth quarter during the call. We currently have a ‘Neutral’ recommendation on C.R. Bard. The stock currently retains a Zacks #3 Rank, which translates into a short-term “Hold” rating.
 

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