On Jun 4, we retained our Neutral recommendation on
CR Bard Inc.
) following its moderate first-quarter results. Despite a
potential material upside from the Gore litigation, the company's
organic growth rate, especially in the U.S., along with declining
profits remain areas of concern.
Why the Retention?
On Apr 23, Bard posted first-quarter 2013 adjusted earnings per
share of $1.44, which met the Zacks Consensus Estimate. Although
adjusted earnings declined 11% year over year, it was within the
company's previously announced guidance.
Revenues inched up 1% both in terms of reported and constant
currency on a year-over-year basis to $740.3 million. Revenues
surpassed the Zacks Consensus Estimate of $738 million.
Bard's earnings have also managed to beat the Zacks Consensus
Estimate in three out of the last four quarters with an average
surprise of 0.40%. Over the past 60 days, the Zacks Consensus
Estimate has moved down by 1.7% to $6.25 for 2013 but increased
by 0.8% to $7.67 for 2014.
Potential benefit from the Gore litigation, acquisitions,
expansion into the emerging markets and new products should
enable the company to drive long-term growth. International sales
are being boosted by solid growth in emerging markets. Further,
its recent investment strategies to increase profitability should
pay off in the future.
However, the company lacks short-term catalysts. The challenging
Med-tech environment, which is affecting Bard's organic growth,
might continue to do so going forward. Moreover,
government-mandated healthcare reforms in the U.S. have led to a
less flexible pricing environment and may pressurize prices
across the board. Apart from these, the company continues to face
procedure volume headwind in the domestic market.
Other Stocks to Consider
CR Bard has a Zacks Rank #3 (Hold). While we remain on the
sidelines regarding Bard, other medical stocks that warrant a
Becton, Dickinson and Company
West Pharmaceutical Services
). All these stocks carry a Zacks Rank #2 (Buy).
BARD C R INC (BCR): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
CONMED CORP (CNMD): Free Stock Analysis
WEST PHARM SVC (WST): Free Stock Analysis
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