We reiterate our Neutral recommendation on
). Earnings for the second quarter matched the Zacks Consensus
Estimate of $1.38. 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
The company is pursuing a number of key product initiatives. It
will launch several products before the end of fiscal 2013.
Besides, Becton, Dickinson favorably tweaked its guidance for
the fiscal year on a currency neutral basis. The prospects for
safety needles are more upbeat in Europe, than in the U.S. market,
following the adoption of safety standards. Next generation safety
needles were recently launched.
Becton, Dickinson maintains a focus on geographical expansion
into overseas markets, in particular the emerging markets, which
accounted for about 21.4% of revenues in the second quarter of 2012
(growing at 10% year over year). Growth in safety needles in
emerging markets was a bright spot, which rose 26% year over
Cash flows, including fresh debt, are being utilized for large
stock repurchases. Moreover, the company is engaged in operational
enhancement and cost containment. However, it suffers from a lack
of near-term catalysts even though it has undertaken several
initiatives to bolster product pipeline.
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's preeminent 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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