We reiterate our Neutral rating on
CR Bard Inc.
). Its first quarter fiscal 2012 adjusted earnings of $1.61 per
share beat the Zacks Consensus Estimate of $1.57. Revenues
increased 4% (up 5% in constant currency) year over year to $730
million, but fell short of the Zacks Consensus Estimate of $733
million. Year-over-year revenue growth was triggered by healthy
sales across the company's Vascular and Oncology businesses
especially in international markets.
The company's resource depth and focused innovation are its
major competitive advantages.The launch of Dignishield fecal
management system in the urology division was the most important
product launch in the first quarter of 2012 as the company hopes
that this offering will revive the declining continence business.
Bard has recently introduced Conquest HP 40 PTA catheter, Phasix
mesh material used in surgery and the Xenmatrix xenograft in the
C.R. Bard has a reasonably strong pipeline with a substantial
number of projects in each business segment. C.R. Bard received CE
Mark approval for its Sherlock 3CG tip confirmation technology with
an expanded label and expects to launch it in Europe either in late
second quarter or early third quarter 2012. Fluency Plus stent
grafts and Denali vena cava filters are expected to be rolled out
toward the end of 2013 or early 2014. Site-Rite Prevue ultrasound
system, Fazer stereotactic system, Perfix plug design, Ventralight
ST ventral hernia repair are some of the other products that the
company is looking forward to launch in the near term.
The company has embarked on a four-point growth strategy. Its
strategy includes sales force expansion, complementary product
acquisitions, increased internal product development and cost
control. The company continues to successfully execute this
strategy with sustained research and development (R&D)
investment producing new high-margin products, enhanced by key
acquisitions and divestitures and a larger sales force. In this
regard, we view that the acquisition of Medivancebodes well with
C.R. Bard's business model and will boost its offerings in the
critical care settings. Moreover, C.R. Bard bought medical devices
maker ClearStream Technologies last year. The company expects these
deals to be accretive to its earnings in 2012. More recently, C.R.
Bard scooped up Lutonix Inc. The acquisition will enable it to
expand into the large and lucrative market for drug-coated
The pricing environment has been lackluster for most of the
devices offered by the company due to competition and a soft
hospital equipment purchase backdrop. The constant flow of new
products makes price increases on older products difficult.
However, newer products are generally priced at some premium to
existing models. Government-mandated healthcare reform in the U.S.
has led to a less flexible pricing environment and may pressure
prices across the board. Moreover, the company continues to face
procedure volume headwind in the domestic market.
C.R. Bard is exposed to competition from large manufacturers
with multiple business lines to smaller manufacturers that offer a
limited selection of products, and to a limited extent, to
reprocessors of single-use medical devices. Competition has
increased across several businesses, especially in hernia fixation
business. Some of the larger competitors include
Our recommendation on the stock is supported by a short-term
Zacks #3 Rank (Hold).
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