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BD (BDX) Q4 Earnings In-Line With Estimates, Margins Contract
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Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $3.42 in the fourth quarter of fiscal 2023, up 24.4% year over year. The figure was in line with the Zacks Consensus Estimate.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
GAAP EPS for the quarter was 53 cents, reflecting a decline of 42.4% from the year-earlier figure.
Full-year adjusted EPS was $12.21, up 7.6% compared with that at the end of the comparable fiscal 2022 period. The figure lagged the Zacks Consensus Estimate by 0.2%.
Revenues in Detail
BD registered revenues of $5.09 billion in the fiscal fourth quarter, up 6.8% year over year. The figure surpassed the Zacks Consensus Estimate by 1.4%.
At constant exchange rate (CER), revenues climbed 5.9%.
The top-line improvement primarily resulted from robust performances by BD’s segments.
Base revenues were $5.07 billion in the fiscal fourth quarter, up 7.3% year over year on a reported basis and 6.3% at CER.
Base organic revenue growth for the fiscal fourth quarter was 7% at CER.
Full-year revenues were $19.37 billion, reflecting a 2.7% improvement from the comparable fiscal 2022 period. The figure surpassed the Zacks Consensus Estimate by 0.4%.
Segment Details
BD’s operations consist of three worldwide business segments — BD Medical, BD Life Sciences and BD Interventional.
For the quarter under review, BD Medical reported worldwide revenues of $2.55 billion, up 7.5% from the year-ago quarter on a reported basis and 6.2% at CER. Per management, this upside can be attributed to strong double-digit growth in Medication Management Solutions and Pharmaceutical Systems (PS) business units. This compares to our projection of fiscal fourth-quarter segmental revenues of $2.45 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.33 billion, up 3.3% year over year on a reported basis and up 2.2% at CER. The segment’s performance reflected solid growth in the base business and an expected decline in COVID-only testing revenues. The fiscal fourth-quarter revenues compare to our estimate of $1.34 billion.
BD Interventional segment generated worldwide revenues of $1.20 billion, up 9.7% from the year-ago quarter on a reported basis and 9.6% at CER. This was owing to strong growth across the segment. The fiscal fourth-quarter revenues compare to our estimate of $1.22 billion.
Geographic Results
In the fourth quarter of fiscal 2023, revenues in the United States improved 6.3% to $2.88 billion. This compares to our estimate of $2.87 billion.
International revenues grossed $2.21 billion, up 7.6% from the year-ago quarter on a reported basis and 5.3% at CER. This compares to our estimate of $2.13 billion.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
In the quarter under review, BD’s gross profit declined 18.1% to $1.70 billion. The gross margin contracted a huge 1017 basis points (bps) to 33.4%.
Selling and administrative expenses decreased 3.8% to $1.14 billion. Research and development expenses decreased 6.3% year over year to $281 million. Adjusted operating expenses of $1.42 billion declined 4.3% year over year.
Adjusted operating profit totaled $283 million, reflecting a 52.4% plunge from the year-ago quarter. The adjusted operating margin in the fiscal fourth quarter contracted 691 bps to 5.6%.
Financial Position
BD exited fiscal 2023 with cash and cash equivalents and short-term investments of $1.42 billion compared with $1.01 billion at the fiscal 2022-end. Total debt (including current debt obligations) at the end of fiscal 2023 was $15.88 billion compared with $16.07 billion at the fiscal 2022-end.
Cumulative net cash flow from continuing operating activities at the end of fiscal 2023 was $2.99 billion compared with $2.47 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 4.23%.
Fiscal 2024 Guidance
BD has initiated its financial outlook for fiscal 2024.
BD projects its full fiscal year revenues to be in the range of $20.1 billion-$20.3 billion. The Zacks Consensus Estimate is pegged at $20.32 billion.
For fiscal 2024, organic revenue growth is expected to be between 5.25% and 6.25%, while revenue growth at CER is expected to be in the range of 4.5-5.5%.
For the full fiscal year, adjusted EPS is anticipated in the range of $12.70-$13.00, representing growth of 4-6.5%. The Zacks Consensus Estimate is pegged at $13.49.
Our Take
BD exited the fourth quarter of fiscal 2023 with in-line earnings and better-than-expected revenues. Solid top-line and bottom-line results, along with improvements in the overall base revenues, were impressive. Robust performances by all its segments and both geographic regions were encouraging. Strength in BD’s segment’s business units during the reported quarter was also promising.
This month, BD’s Medication Delivery Solutions (MDS) business unit launched its next-generation needle-free blood draw technology, the new PIVO Pro Needle-free Blood Collection Device. In August, BD received the FDA’s 510(k) clearance for the BD Respiratory Viral Panel for the BD MAX System. These developments also raise our optimism.
However, lower COVID-only testing revenues in the quarter were discouraging from a business perspective. MDS unit’s softness in China, driven by market dynamics (including volume-based procurement) and the PS unit’s slowdown in China exports of anticoagulants, were also concerning. Rising product costs put pressure on the margins, leading to the contraction of both margins, which do not bode well.
Zacks Rank and Key Picks
BD currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , DexCom, Inc. (DXCM - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million surpassed the Zacks Consensus Estimate by 4%. It currently carries a Zacks Rank #2.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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BD (BDX) Q4 Earnings In-Line With Estimates, Margins Contract
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $3.42 in the fourth quarter of fiscal 2023, up 24.4% year over year. The figure was in line with the Zacks Consensus Estimate.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
GAAP EPS for the quarter was 53 cents, reflecting a decline of 42.4% from the year-earlier figure.
Full-year adjusted EPS was $12.21, up 7.6% compared with that at the end of the comparable fiscal 2022 period. The figure lagged the Zacks Consensus Estimate by 0.2%.
Revenues in Detail
BD registered revenues of $5.09 billion in the fiscal fourth quarter, up 6.8% year over year. The figure surpassed the Zacks Consensus Estimate by 1.4%.
At constant exchange rate (CER), revenues climbed 5.9%.
The top-line improvement primarily resulted from robust performances by BD’s segments.
Base revenues were $5.07 billion in the fiscal fourth quarter, up 7.3% year over year on a reported basis and 6.3% at CER.
Base organic revenue growth for the fiscal fourth quarter was 7% at CER.
Full-year revenues were $19.37 billion, reflecting a 2.7% improvement from the comparable fiscal 2022 period. The figure surpassed the Zacks Consensus Estimate by 0.4%.
Segment Details
BD’s operations consist of three worldwide business segments — BD Medical, BD Life Sciences and BD Interventional.
For the quarter under review, BD Medical reported worldwide revenues of $2.55 billion, up 7.5% from the year-ago quarter on a reported basis and 6.2% at CER. Per management, this upside can be attributed to strong double-digit growth in Medication Management Solutions and Pharmaceutical Systems (PS) business units. This compares to our projection of fiscal fourth-quarter segmental revenues of $2.45 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.33 billion, up 3.3% year over year on a reported basis and up 2.2% at CER. The segment’s performance reflected solid growth in the base business and an expected decline in COVID-only testing revenues. The fiscal fourth-quarter revenues compare to our estimate of $1.34 billion.
BD Interventional segment generated worldwide revenues of $1.20 billion, up 9.7% from the year-ago quarter on a reported basis and 9.6% at CER. This was owing to strong growth across the segment. The fiscal fourth-quarter revenues compare to our estimate of $1.22 billion.
Geographic Results
In the fourth quarter of fiscal 2023, revenues in the United States improved 6.3% to $2.88 billion. This compares to our estimate of $2.87 billion.
International revenues grossed $2.21 billion, up 7.6% from the year-ago quarter on a reported basis and 5.3% at CER. This compares to our estimate of $2.13 billion.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
Becton, Dickinson and Company price-consensus-eps-surprise-chart | Becton, Dickinson and Company Quote
Margin Analysis
In the quarter under review, BD’s gross profit declined 18.1% to $1.70 billion. The gross margin contracted a huge 1017 basis points (bps) to 33.4%.
Selling and administrative expenses decreased 3.8% to $1.14 billion. Research and development expenses decreased 6.3% year over year to $281 million. Adjusted operating expenses of $1.42 billion declined 4.3% year over year.
Adjusted operating profit totaled $283 million, reflecting a 52.4% plunge from the year-ago quarter. The adjusted operating margin in the fiscal fourth quarter contracted 691 bps to 5.6%.
Financial Position
BD exited fiscal 2023 with cash and cash equivalents and short-term investments of $1.42 billion compared with $1.01 billion at the fiscal 2022-end. Total debt (including current debt obligations) at the end of fiscal 2023 was $15.88 billion compared with $16.07 billion at the fiscal 2022-end.
Cumulative net cash flow from continuing operating activities at the end of fiscal 2023 was $2.99 billion compared with $2.47 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 4.23%.
Fiscal 2024 Guidance
BD has initiated its financial outlook for fiscal 2024.
BD projects its full fiscal year revenues to be in the range of $20.1 billion-$20.3 billion. The Zacks Consensus Estimate is pegged at $20.32 billion.
For fiscal 2024, organic revenue growth is expected to be between 5.25% and 6.25%, while revenue growth at CER is expected to be in the range of 4.5-5.5%.
For the full fiscal year, adjusted EPS is anticipated in the range of $12.70-$13.00, representing growth of 4-6.5%. The Zacks Consensus Estimate is pegged at $13.49.
Our Take
BD exited the fourth quarter of fiscal 2023 with in-line earnings and better-than-expected revenues. Solid top-line and bottom-line results, along with improvements in the overall base revenues, were impressive. Robust performances by all its segments and both geographic regions were encouraging. Strength in BD’s segment’s business units during the reported quarter was also promising.
This month, BD’s Medication Delivery Solutions (MDS) business unit launched its next-generation needle-free blood draw technology, the new PIVO Pro Needle-free Blood Collection Device. In August, BD received the FDA’s 510(k) clearance for the BD Respiratory Viral Panel for the BD MAX System. These developments also raise our optimism.
However, lower COVID-only testing revenues in the quarter were discouraging from a business perspective. MDS unit’s softness in China, driven by market dynamics (including volume-based procurement) and the PS unit’s slowdown in China exports of anticoagulants, were also concerning. Rising product costs put pressure on the margins, leading to the contraction of both margins, which do not bode well.
Zacks Rank and Key Picks
BD currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , DexCom, Inc. (DXCM - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million surpassed the Zacks Consensus Estimate by 4%. It currently carries a Zacks Rank #2.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.