We have reiterated our Neutral rating on
CR Bard Inc.
) following its third quarter results with a price target of
In the reported quarter, adjusted earnings of $1.64 per share
surpassed the Zacks Consensus Estimate by a penny and surpassed
the year-ago earnings of $1.62 per share by two cents. However,
net income declined 1% as higher operating expenses dampened
moderate revenue growth in the quarter.
Revenues inched up 1% (up 3% in constant currency) year over
year to $722.9 million, but fell short of the Zacks Consensus
Estimate of $735 million. Moderate growth across Urology and
Oncology product groups were partially offset by declining
In the third quarter, CR Bard acquired privately-owned Neomend
Inc. to expand its surgical specialty product line.
CR Bard's vast product portfolio insulates it from
fluctuations in any single therapeutic category. The company aims
to achieve long-term growth by focusing on acquisitions, internal
Research and Development (R&D) and strategic investments in
higher growth markets. Moreover, potential benefit from the Gore
litigation along with new product launches should enable the
company to drive organic growth.
Although it constitutes a small portion of total sales,
positive returns from the businesses in emerging markets have
contributed to the company's growth. Moreover, CR Bard remains
committed to delivering incremental returns to investors by
leveraging its solid balance sheet, healthy free cash flow and
However, the company continues to face procedure volume
headwind in the domestic U.S. market. Moreover,
government-mandated healthcare reforms in the U.S. have led to a
less flexible pricing environment and may pressurize prices
In addition, increasing competition from strong players like
Boston Scientific Corporation
Johnson & Johnson
) remains a matter of concern.
Our Neutral recommendation on the stock carries a short-term
Zacks #4 Rank (Sell).
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