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On Mar 13, we retained Neutral recommendation on CR Bard Inc. (BCR - Analyst Report) following its fourth-quarter results. Despite the upbeat results, the company’s organic growth rate, especially in the U.S., remains an area of concern.

Why the Retention?

On Jan 31, Bard posted fourth-quarter 2012 adjusted earnings of $1.70 per share, which was flat year over year and surpassed the Zacks Consensus Estimate of $1.67. The result exceeded the company’s guidance by a couple of cents. Revenues inched up 1% (up 2% in constant currency) year over year to $762.6 million. Revenues surpassed the Zacks Consensus Estimate of $756 million. Reported revenues met the upper end of the company’s guidance.

Bard’s earnings have also managed to beat the Zacks Consensus Estimate in three out of the last four quarters with an average surprise of 0.94%. Over the past 60 days, the Zacks Consensus Estimate has moved down drastically by 50 cents to $6.36 for 2013 but increased 10 cents to $7.62 for 2014.

Although accretive in the long term, Bard’s latest acquisitions appear expensive and might enhance integration-related expenses in the short term. Further, we wait to see how CR Bard utilizes the expected benefits from the Gore litigation lawsuit.

However, the challenging Med-tech environment might further add pressure going forward. Moreover, government-mandated healthcare reforms in the U.S. have led to a less flexible pricing environment and may pressurize prices across the board. These apart, the company continues to face procedure volume headwind in the domestic market.

Other Stocks to Consider

CR Bard has a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Bard, companies like Medical Action Industries , carrying a Zacks Rank #1 (Strong Buy), as well as The Cooper Companies Inc. (COO - Analyst Report) and Becton, Dickinson and Company (BDX - Analyst Report) , which carry a Zacks Rank #2 (Buy), are expected to do well in the medical industry.
 

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