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Becton Dickinson (BDX) Down 5.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Becton Dickinson (BDX). Shares have lost about 5.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Becton Dickinson due for a breakout? 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 Q1 Earnings Beat, FY20 Guidance Slashed

Becton, Dickinson reported first-quarter fiscal 2020 EPS of $2.65, which beat the Zacks Consensus Estimate of $2.63. The bottom line however dropped 1.9% on a year-over-year basis and fell 0.4% at cc.

The company raked in revenues of $4.23 billion, surpassing the Zacks Consensus Estimate of $4.17 billion. The reported figure improved 1.6% from the year-ago quarter. At cc, revenues rose 2.5%.

Segment Details

BD Medical

In the quarter under review, the company reported worldwide revenues of $2.09 billion, down 2.1% from the year-ago quarter and 1.1% at cc. Per management, the segment's results were offset by year-over-year declines in the Medication Management Solutions and Diabetes Care units.

BD Life Science

Worldwide revenues in the segment totaled $1.12 billion, up 6.3% year over year and 6.4% at cc. Per management, the upside was driven by solid performance in the Diagnostic Systems and Biosciences units.

BD Interventional

This segment generated worldwide revenues of $1.01 billion, up 4.3% from the year-ago quarter. At cc, revenues grew 5% on strong performance by the Surgery, Urology and Critical Care and Surgery sub-units.

Geographic Results

US

In the fiscal first quarter, revenues in the United States improved 1.8% to $2.43 billion. Per management, growth in the United States was driven by solid show by the BD Medical, BD Life Sciences and the Interventional units.

International

Revenues outside the United States grossed $1.80 billion, up 1.2% from the year-ago quarter. At cc, revenues at the segment grew 3.4%. Per management, International revenue growth was driven by strength in China and the Asia-Pacific region.

Margin Analysis

In the quarter, gross profit amounted to $2 billion, up 0.3% from the prior-year quarter tally. Gross margin was 46.8%, down 60 bps from the prior-year quarter.

Operating income in the quarter grossed $501 million, down 43.6% from the year-ago quarter. As a percentage of revenues, operating margin in the quarter was 11.9%, down from the year-ago quarter’s 21.3%.

Adjusted operating income amounted to $587 million, down 8.6% from the year-ago figure. Adjusted operating margin was 13.9%, down 150 bps.

Guidance

BD now expects fiscal 2020 revenues to increase 1.5-2.5% year over year and 2.5-3.5% at cc, compared with the previously-stated range of 4-4.5% and 5-5.5% at cc.

Adjusted EPS is now expected between $11.90 and $12.10, suggesting growth of 4-5.5%. This compares with the earlier-projected range of $12.50 and $12.65.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -14.85% due to these changes.

VGM Scores

At this time, Becton Dickinson has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Becton Dickinson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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