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Why Is Becton, Dickinson (BDX) Down 2.4% Since its Last Earnings Report?

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It has been about a month since the last earnings report for Becton, Dickinson and Company (BDX - Free Report) . Shares have lost about 2.4% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is BDX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Becton, Dickinson posted second-quarter fiscal 2018 earnings of $2.65 which beat the Zacks Consensus Estimate of $2.61. Earnings also improved 7.8% year over year at cc.

BD posted revenues of $4.22 billion, surpassing the Zacks Consensus Estimate of $4.12 billion. Revenues rose 5.7% at cc. On a year-over-year basis, revenues surged 42.2% buoyed by synergies from the acquisition of C. R. Bard.

Segment Details

BD Medical

The segment posted worldwide revenues of $2.17 billion, up 4.2% at cc. Per management, the strong results were driven by the Medication Delivery Solutions, Diabetes Care and Pharmaceutical Systems units.

BD Life Sciences

Worldwide revenues in this segment came in at $1.18 billion, reflecting an increase of 7.3% at cc.

Revenue growth reflects strong performance in the Diagnostic Systems and Biosciences units.  However, growth in the Preanalytical Systems unit was negatively impacted by a production issue in one of its product lines which was resolved in the quarter.

The segment’s growth was aided by flu-related revenues in the Diagnostic Systems unit as a result of a stronger flu season in comparison to the prior year.

BD Interventional

In the reported quarter, this segment posted worldwide revenues of around $1 billion, up 7.1% at cc. The segment's results reflect strong performance by the Peripheral Intervention and Urology and Critical Care units and solid growth in the Surgery unit.

Geographic Results

US

Sales in the United States came in at $2.33 billion, up 4% at cc in the second quarter.

The BD Medical segment accounted for revenues of $1.18 billion in the United States.

BD Life Sciences accounted for $498 million of revenues, while BD Interventional recorded $649 million in the United States.

International

Sales outside the United States came in at $1.9 billion, up 7.9% at cc.

The upside was driven by strong performance by the BD Medical, BD Life Sciences and BD Interventional segments.

Internationally, BD Medical posted revenues worth $994 million. BD Life Sciences raked in international revenues of $600 million, while BD Interventional contributed $303 million.

Margin Analysis

In the reported quarter, gross profit totaled $1.6 billion, up 14.8% year over year.

BD posted operating income of $183 million, down 59%.

Guidance

Buoyed by the solid fiscal second-quarter performance, BD raised its fiscal 2018 guidance. The company expects adjusted earnings per share of $10.9-$11.05 on an increase in the estimated benefit from foreign currency. This represents growth of approximately 15-16.5% over fiscal 2017.

The company raised the revenue growth guidance for fiscal 2018 to 5-5.5%, which is also at a high end of the previous guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions higher for the current quarter compared to seven lower.

Becton, Dickinson and Company Price and Consensus

 

VGM Scores

At this time, BDX has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.

Outlook

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




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