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Here's Why You Should Hold Becton, Dickinson (BDX) Stock Now

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Becton, Dickinson and Company (BDX - Free Report) , also known as BD, is expected to benefit from a slew of developments and a strong guidance for fiscal 2019. However, a few headwinds are anticipated in fiscal 2019 along with product recall issues.

The stock currently has a Zacks Rank #3 (Hold).

Price Performance

Shares of BD have declined 3.3%, comparing favorably with the industry’s decline of 15.3% in a year’s time. The current level is also better than the S&P 500 index’s 12.2% fall.

What’s Deterring the Stock?

BD expects raw material pricing pressure, which increased in 2018, to accelerate into fiscal 2019, primarily due to resin price increases owing to a supply-constrained market.

Additionally, headwinds related to the sale of Advanced Bioprocessing and the divestitures to Merit Medical are likely to keep margins under pressure.

In the last reported quarter, management declared that BD has decided to discontinue its insulin infusion sets owing to a moderately-higher-than-anticipated rate of complaints associated with insertion that occurred during the pilot launch of the product.

Why Should You Retain BD?

A series of developments in recent times have been raising optimism in the stock.

Recently, BD received approval from the FDA for its BD MAX enteric viral panel, a molecular diagnostic test for the direct qualitative detection and differentiation of enteric viral pathogens that cause viral gastroenteritis.

Earlier this month, BD announced an enterprise level cybersecurity assessment by the UL Healthcare. (Read More: BD Gets Enterprise Level Cybersecurity Assessment From UL)

In November, BD launched a software application, HealthSight, to help hospitals and health systems identify drug diversion. (Read More: BD Brings HealthSight Diversion App to Combat Opioid Crisis)

Additionally, BD’s Phoenix CPO detect test received 510(k) clearance from the FDA (Read More: BD's FDA Nod for Phoenix Test Boosts Diagnostic Systems)

It is also encouraging to note that BD has issued a strong guidance for fiscal 2019.

BD expects revenues to increase 8.5-9.5% year over year primarily owing to the C. R. Bard acquisition. At constant currency (cc), the same metric is anticipated to increase 5-6%.

Adjusted earnings per share are projected between $12.05 and $12.15, reflecting growth of 13-14% at cc.

Which Way Are Estimates Headed?

For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $2.63, reflecting an increase of 6.1% on a year-over-year basis. The same for revenues is pinned at $4.12 billion, showing an increase of 33.7% year over year.

For fiscal 2019, the Zacks Consensus Estimate for revenues is at $17.44 billion, reflecting a rise of 9.1% year over year. However, the same for earnings stands at $12.11, showing growth of 10% year over year.

Key Picks

Some better-ranked stocks in the broader medical space are Veeva Systems Inc. (VEEV - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and OPKO Health, Inc. (OPK - Free Report) .

Veeva Systems’ long-term earnings growth rate is projected at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Integer Holdings projects earnings growth rate of 31.2% for the fourth quarter. It currently carries a Zacks Rank #2 (Buy).

OPKO Health’s long-term earnings growth rate is projected at 12%. The stock presently sports a Zacks Rank of 1.

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