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Why Is Becton Dickinson (BDX) Up 4.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Becton Dickinson (BDX - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.

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

Becton, Dickinson Beats on Q3 Earnings, Guidance Intact

BD reported third-quarter fiscal 2019 EPS of $3.08, which beat the Zacks Consensus Estimate of $3.05. The bottom line also improved 5.8% on a year-over-year basis and rose 14.8% at cc.

The company raked in revenues of $4.35 billion, surpassing the Zacks Consensus Estimate by 0.06%. The reported figure increased 0.6% from the year-ago quarter. At cc, revenues rose 5.7%.

Segment Details

BD Medical

In the quarter under review, BD Medical segment reported worldwide revenues of $2.31 billion, up 2.9% from the year-ago quarter and 6% at cc. Per management, the segment's results were driven by performance in the Medication Management Solutions, Medication Delivery Solutions and Pharmaceutical Systems units.

BD Life Sciences

Worldwide revenues in the segment totaled $1.06 billion, down 1.9% year over year but increased 5.4% at cc.

BD Interventional

This segment generated worldwide revenues of $0.98 billion, up 2.8% from the year-ago quarter. At cc, revenues grew 5.2%. The segment's results reflect strong performance by the Urology and Critical Care and Surgery sub-units.

Geographic Results

US

In the fiscal third quarter, revenues in the United States improved 4.4% to $2.44 billion. Revenues grew 5% at cc. Per management, growth in the United States was driven by performance of the BD Medical and BD Interventional segments.

International

Revenues outside the United States grossed $1.91 billion, down 1.6% from the year-ago quarter. At cc, the segment grew 6.5%. Per management, international revenue growth in the third quarter was strong in China and EMEA.

Margin Analysis

In the quarter, gross profit amounted to $2.07 billion, up 2.9% from the prior-year quarter tally. Gross margin was 47.7%, up 60 bps from the prior-year quarter.

Operating income in the quarter grossed $626 million, down 22.3% from the year-ago quarter. As a percentage of revenues, operating margin in the quarter was 14.4%, up 240 bps year over year.

Adjusted operating income amounted to $716 million, up 9.6% from the year-ago figure.

Guidance Reaffirmed

For fiscal 2019, the company continues to expect revenue growth of 8-9%. At cc, revenues are anticipated to increase 5-6%.

Adjusted EPS is expected between $11.65 and $11.75, indicating growth of 12% at cc. However, this includes unfavorable impact of foreign currency.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Becton Dickinson has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

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


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