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Becton, Dickinson Banks on Bard Buyout, Medical Unit Weak

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On Dec 13, 2017, we issued an updated research report on, Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The leading MedTech company is steadily progressing with the acquisition of C. R. Bard . Post completion, BD expects growth in adjusted earnings starting fiscal 2019. The acquisition will enable the company generate profits from complementary businesses and geographical expansion.

On Nov 16, BD announced that it will divest soft tissue core needle biopsy products for $100M to Merit Medical Systems Inc. (MMSI - Free Report) . The products are currently sold under Bard's Aspira product line of tunneled home drainage catheters and accessories. The divestment is contingent on the completion of the BD’s acquisition of Bard.

Year to date, BD has outperformed the industry in terms of stock price. The company has returned 34.2%, comparing favorably with the industry’s rally of just 21.3%. Notably, the current return is relatively higher than the S&P 500’s increase of 21.9%.


On the flip side, lackluster performance by BD’s Medical Unit is a concern. Performance in the segment is affected by sluggishness in the Medication Management Solutions and Pharmaceutical Systems units in the United States.

Within the Diabetes Care unit, BD temporarily has paused shipments of insulin infusion sets, thanks to higher-than-anticipated rate of complaints associated with insertion during the pilot launch of the product. However, management conducted a clinical trial to gather insights and ensure that patients ultimately realize the full benefits of BD FlowSmart technology. BD continues to collaborate with Medtronic Plc (MDT - Free Report) toward full commercialization of the product

Adding to woes, the ongoing political conundrum pertaining to the repealing of Obamacare by the Republicans has given rise to uncertainties for dental stocks like BD and CONMED Corporation. Thus, lack of favorable developments in the regulatory front is a concern for these MedTech majors.

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