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Becton, Dickinson (BDX) Earnings and Revenues Beat in Q3

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Becton, Dickinson and Company (BDX - Free Report) posted third-quarter fiscal 2018 earnings per share of $2.91, which beat the Zacks Consensus Estimate of $2.85. Earnings also improved 18.3% on a year-over-year basis and 11% at constant currency (cc).

Becton Dickinson, also known as BD, raked in revenues of $4.28 billion, surpassing the Zacks Consensus Estimate of $4.24 billion. Revenues surged 41% from the year-ago quarter and 5.5% at cc.

Meanwhile, BD’s shares have gained 24.4% compared with the industry’s 7.1%.

BD currently carries a Zacks Rank #3 (Hold).

Segment Details

BD Medical

In the quarter under review, BD Medical posted worldwide revenues of $2.25 billion, up 20% from the year-ago quarter and 5.7% at cc. The strong results were driven by strength in the Medication Delivery Solutions, Medication Management Solutions and Pharmaceutical systems. Per management, the upside can be attributed to the acquisition of C.R. Bard.

BD Life Sciences

Worldwide revenues in the segment totaled $1.08 billion, up 8.2% year over year and 5.6% at cc. Per management, revenues were strong across the Preanalytical Systems, Diagnostic Systems and Biosciences units.

BD Interventional

This segment posted worldwide revenues of $0.95 billion up 5.1% year over year at cc.

Geographic Results

US

In the reported quarter, revenues in the United States shot up 45.9% to $2.34 billion. Revenues grew 5.9% at cc. Per management, the upside can attributed to the acquisition of C. R. Bard. and strong growth in the BD Medical and BD Life Sciences segments, and in the Peripheral Intervention and Urology and Critical Care units within the BD Interventional segment.

International

Revenues outside the United States grossed $1.94 billion, up 35.4% from the year-ago quarter and 5.1% at cc. Per management, overseas revenue growth was driven by strong performance by the BD Life Sciences segment as well as in the Medication Delivery Solutions and Medication Management Solutions units. The Surgery and Peripheral Intervention units in the BD Interventional segment also drove the growth.

Becton, Dickinson and Company Price, Consensus and EPS Surprise

Becton, Dickinson and Company Price, Consensus and EPS Surprise | Becton, Dickinson and Company Quote

Margin Analysis

In the reported quarter, gross profit totaled $2 billion, up 33.3% from the prior-year quarter. Gross margin was 46.8%, down 260 basis points (bps).

Operating income in the quarter grossed $513 million, reflecting an improvement from the year-ago quarter’s operating loss of $223 million.

Guidance

The company expects sales to improve 31.5% on a reported basis, compared to the previous range of 31-31.5%. At cc, revenues are expected to grow 5.5%, compared to the previous range of 5-5.5%. Notably, the Zacks Consensus Estimate for revenues is pegged at $15.89 billion.

Earnings are expected within $10.95-$11.05 compared with the previous $10.90-$11.05. This represents growth of approximately 15.5-16.5% over fiscal 2017 and of 12% at cc. The Zacks Consensus Estimate is pinned at $10.99, within the guided range.

Per management, the acquisition of C.R. Bard is expected to prove accretive to adjusted earnings per share on high single-digit basis in fiscal 2019.

Our Take

BD saw a solid second quarter, with earnings and revenues surpassing the consensus mark. Strong performance by the core BD Medical and Life Sciences buoys optimism. Additionally, management is optimistic about the earlier completed acquisition of C.R. Bard, which has also proved accretive in the reported quarter. The company’s Peripheral Intervention unit has also put up a solid show, which drove geographical sales. A strong guidance for fiscal 2018 also looks promising.

On the flip side, contracting gross margins raise concern. Management still foresees a sales impact from Hurricane Maria in Puerto Rico on Bard's business in first-quarter of fiscal 2019. Stiff competition in the industry is another concern.

Q2 Earnings of MedTech Majors at a Glance

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Thermo Fisher Scientific Inc. (TMO - Free Report) , Intuitive Surgical, Inc (ISRG - Free Report) and Illumina, Inc (ILMN - Free Report) .

While Intuitive Surgical and Illumina sport Zacks Rank #1 (Strong Buy), Stryker carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted earnings improved 38% year over year.

Thermo Fisher reported adjusted earnings per share of $2.75, which beat the Zacks Consensus Estimate by 4.6%.

Illumina reported adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of $1.11.

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