Becton, Dickinson and Company
) reported adjusted (excluding one-time items) second-quarter
fiscal 2012 earnings per share of $1.38 matching the Zacks
Consensus Estimate and the year-ago earnings per share.
Net income (as reported) for the second quarter dropped 6.7%
year over year to roughly $291 million (or $1.39 a share).
During the reported quarter, Becton Dickinson inked a definitive
agreement to sell the Discovery Labware sub-segment of BD
BioSciences. The deal is expected to be accomplished by the end of
the current calendar year subject to standard conditions. The
assets to be hived off are expected to generate revenues and
earnings per share of $235 million and in a range 23 cents to 27
cents, respectively. Becton Dickinson expects to book a profit from
Becton Dickinson recorded second quarter revenues of $1,991
million, up 3.6% (or 4.6% in constant currency) year over year,
surpassing the Zacks Consensus Estimate of $1,942 million.
On a regional basis, domestic revenues inched up 2.2% year over
year to $848 million while overseas revenues moved up 4.6% (or 6.3%
in constant currency) to $1,143 million. Overseas sales were driven
by sustained growth in emerging nations and robust safety
Second Quarter Review by Segments
At BD Medical, global revenues moved up 4.1% (or 5.3% in
constant currency) year over year to $1,021 million in the quarter,
driven by healthy revenues from Diabetes Care and Pharmaceutical
Within BD Medical, revenues from Medical Surgical Systems were
up 2.8% year over year to $518.9 million. Diabetes Care sales moved
up 5.5% to $219.2 million while Pharmaceutical Systems revenues
were up 5.2% to $283 million.
At BD Diagnostics, global revenues were up 4.1% (or 5% in
constant currency) year over year to $630 million, on account of
solid growth in both Women's Health and Cancer as well as
Preanalytical Systems. Preanalytical Systems revenues rose 5.6% to
$323.3 million while Diagnostic Systems sales were up 2.5% to
Global sales from the BD Biosciences unit increased 1.3% (or
1.7% in constant currency) year over year to $340 million driven by
clinical reagent sales in the Cell Analysis segment and robust
revenues from emerging markets. Cell Analysis revenue rose 2.4% to
$261.5 million while Discovery Labware sales declined 2.2% to $78.1
Margins and Expenses
Gross margin declined to 51.2% in the reported quarter from
52.1% a year ago while operating margin dropped somewhat to 20.4%
from 22.9% in the prior-year quarter. Consolidated operating costs
and expenses increased 6.9% year over year to $1,584.4 million as
Becton Dickinson spent more on selling and administrative (up 12%)
expenses but marginally less on R&D (down 0.5%).
The company revised its revenue growth forecast, in constant
currency, to a range of 3% to 4% from 2% to 4% earlier. On a
reported basis, Becton Dickinson raised its growth forecast to a
range of 1% to 2% from roughly flat earlier. The company lifted its
target for reported earnings per share, from continuing operations,
to a higher band of $5.68 and $5.73 from $5.60 and $5.70 earlier.
It intends to repurchase, subject to market-related conditions,
$1.5 billion of its common stock during the current fiscal
We remain cautious about Becton Dickinson due to the lack of
major short-term catalysts. The rising demand for safety-needle
products (with higher price points and margins) was the primary
driver of the company's past growth, which is not expected to
continue, given that the U.S. market is already largely
On the positive side, Becton Dickinson'spreeminent global
healthcare products franchise is partly insulated from volatile
macroeconomic conditions and structural deficiencies elsewhere in
the healthcare delivery field.
Becton Dickinson faces a wide range of competitors, including
) in certain niches, in each of its three business segments. We
currently have a long-term Neutral recommendation on the stock. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term "Hold" recommendation.
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