Medical technology major
Becton, Dickinson and Company
) reported third quarter fiscal 2013 adjusted earnings per share
from continuing operations of $1.54, beating the Zacks Consensus
Estimate of $1.47 per share and up 1.3% year over year. Adjusted
earnings exclude one-time items such as a charge of $22 million
(7 cents a share from continuing operations) due to a pending
antitrust class action settlement.
The company reported net income from continuing operations of
$291.9 million (or $1.47 per share), up 6.3% (3.3%) year over
Quarter in Detail
Becton Dickinson recorded third-quarter revenues of $2,052.7
million, up 3.6% (up 5.1% in constant currency) year over year,
marginally ahead of the Zacks Consensus Estimate of $2,050
On a geographic basis, domestic revenues (contributing 41.3%
in the third quarter) inched up 1.3% year over year to $848
million, while overseas revenues increased 5.3% (up 7.9% at
constant exchange rate or CER) to $1,204.9 million. Domestic
revenues were negatively affected by the order timings in
Advanced Bioprocessing and softness in Women's Health and Cancer,
while international revenues were boosted by growth in the
emerging nations and robust growth of safety engineered
At BD Medical, global revenues moved up 6.6% (up 7.9% at CER)
year over year to $1140.5 million in the quarter, driven by
healthy revenues from Medical Surgical Systems, Diabetes Care and
Revenues from Medical Surgical Systems were up 5.5% (up 6.6%
at CER) year over year to $560.9 million. Diabetes Care sales
increased 7.3% (up 9.4%) to $249.6 million, while Pharmaceutical
Systems revenues were up 8.0% (up 9.2%) to $329.9 million.
At BD Diagnostics, global revenues were up 2.0% (up 3.6% at
CER) year over year to $655 million on account of growth in
Preanalytical Systems unit, which was offset by softness in
Women's Health and Cancer in the U.S. Preanalytical Systems
revenues rose 3.4% (up 4.6% at CER) to $344.9 million, while
Diagnostic Systems sales were up a mere 0.5% (up 2.5%) to $310.2
Global revenues from the BD Biosciences unit declined 4.2%
(down 2.5% at CER) year over year to $257.1 million. The downside
was attributable to austerity measures in Western Europe, delays
of government funding in Japan leading to economic slowdown, and
timing of orders in Advanced Bioprocessing, which more than
offset strong instrument placements in the domestic market.
Gross margin contracted 52 basis points (bps) 51.6% in the
reported quarter. Consolidated operating costs and expenses
increased 12.2% year over year to $655.4 million. Operating
margin declined 296 bps to 19.7% in the third quarter.
Becton Dickinson reiterated its guidance for fiscal 2013. The
company expects sales growth for fiscal 2013 in the range of 3.5%
to 4% (growth of 5.0% at CERcompared with 4.5% to 5.0% earlier).
The current Zacks Consensus Estimate of $8,001 million implies
year-over-year growth of over 3% but lags the company's
Becton Dickinson continues to expect reported earnings per
share from continuing operations for fiscal 2013 in a band of
$5.72−$5.75. The projection implies year-over-year growth of
6.5%−7.0% (8.5%−9.0% at CER) for fiscal 2013 or 11.0%−11.5% after
accounting for the medical device tax implemented in Jan
The current Zacks Consensus Estimate of $5.74 falls within the
company's guidance. Becton Dickinson plans to repurchase shares
worth $500 million in fiscal 2013, subject to market
Becton Dickinson continues on a positive note with its third
quarter of fiscal 2013 results exceeding expectations on both
fronts. Barring a poor performance in BD Biosciences, the
balanced segmental growth amid the ongoing global economic
downturn is a major upside.
While the domestic market is largely penetrated, the company's
robust growth in the international markets is a material upside.
Although margins continue to remain under pressure, further
penetration in emerging markets should bolster the top line for
The stock carries a Zacks Rank #3 (Hold). On the other hand,
medical sector stocks worth considering are
Align Technology Inc.
). These stocks carry a favorable Zacks Rank #1 (Strong Buy).
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