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Becton Dickinson (BDX) Down 9.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Becton Dickinson (BDX - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Becton Dickinson due for a breakout? 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 catalysts.

Becton Dickinson Q3 Earnings Surpass Estimates

Becton, Dickinson and Company , also known as BD, reported third-quarter fiscal 2020 adjusted earnings per share of $2.20, which beat the Zacks Consensus Estimate of $2.05 by 7.3%. The bottom line however dropped 28.6% on a year-over-year basis and fell 25% at constant currency (cc).

The company raked in revenues of $3.86 billion, missing the Zacks Consensus Estimate of $3.93 billion by 1.9%. The reported figure declined 11.4% from the year-ago quarter. At cc, revenues fell 9.4%.

Segment Details

BD Medical

In the quarter under review, the company reported worldwide revenues of $2.12 billion, down 8.2% from the year-ago quarter and 6% at cc. Per management, the downside can be attributed to performance in the Medication Delivery Solutions unit. However, growth in the Medication Management Solutions and Pharmaceutical Systems units partially offset the downside.

BD Life Science

Worldwide revenues in the segment totaled $0.95 billion, down 10.1% year over year and 7.8% at cc. Per management, lackluster performance by the Preanalytical Systems  and Biosciences units resulted in the downside. However, robust growth in the Diagnostic Systems unit, which was driven by sales related to COVID-19 diagnostic testing, mainly on the BD Max platform, partially made up for the downside.

BD Interventional

This segment generated worldwide revenues of $0.78 billion, down 20.3% from the year-ago quarter and 19.2% at cc. This was due to the performance in the Surgery and Peripheral Intervention units which indicates continued deferral of elective procedures as a result of the COVID-19 pandemic.

Geographic Results

US

In the fiscal third quarter, revenues in the United States declined 13.1% to $2.12billion. Per management, performance in the United States reflects the net impact of COVID-19 across each of the three operating segments. Within the United States, the Diagnostic Systems unit witnessed strong revenue growth due to COVID-19 testing.

International

Revenues outside the United States grossed $1.74 billion, down 9.2% from the year-ago quarter. At cc, revenues at the segment fell 4.7%. Per management, this downside was owing todeclines in China and Latin America, partially offset by growth in Europe and EMA.

Margin Analysis

In the third quarter, gross profit amounted to $1.66 billion, down 19.9% from the prior-year quarter tally. Gross margin was 43.1%, down 462 bps from the prior-year quarter.

Adjusted operating profit amounted to $418 million, down 41.6% from the year-ago figure. Adjusted operating margin was 10.8%, down 562 bps.

Guidance

Full fiscal 2020, revenues are projected to decline in the range of 2.5% to3% as reported, or 1.5%to 2% on a currency-neutral basis. The Zacks Consensus Estimate for the same is pegged at $16.98 billion.

Full fiscal 2020, adjusted diluted EPS is estimated in the range of $9.80 - $10.00. This reflects a decline of around 14 % to 16%, or 12.5% to 14.5% on a currency-neutral basis from fiscal 2019 adjusted diluted EPS of $11.68. The Zacks Consensus Estimate for the same is pegged at $10.36.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -16.2% due to these changes.

VGM Scores

At this time, Becton Dickinson has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Becton Dickinson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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