We have reiterated our Neutral rating on
CR Bard Inc.
) following its second quarter results, where adjusted earnings of
$1.62 per share trailed the Zacks Consensus Estimate of $1.64.
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Profit was $133.9 million (or $1.54 a share) versus a net loss of
$47.8 million (or loss of 55 cents) in the year-ago quarter.
Moderate revenue growth and lower expenses contributed to higher
Revenues increased 2% (up 4% in constant currency) year over year
to $742.6 million, but fell short of the Zacks Consensus Estimate
of $755 million. The year-over-year improvement was driven by
balanced growth across the company's Vascular, Urology and Oncology
C.R. Bard is well-diversified, providing a complete line of
products to treat medical conditions through less invasive
procedures in a cost-effective manner. The company aims to achieve
long-term growth by focusing on business development, internal
Research and Development (R&D) and strategic investment in
higher growth markets.
C.R. Bard keeps introducing new products in the market at regular
intervals. The company also has a reasonably strong pipeline along
with a substantial number of projects in each of its business
segments. It believes that the Sherlock 3CG, Sapiens TCS, 5.4
French Triple Lumen PowerPICC, the Site-Rite Prevue and the
Powerglide will contribute significantly to growth.
During the second quarter, Bard introduced its latest family of
intermediate-sized low artifact PowerPorts and the PowerPICC FT
series. In May, the company received the 510(k) approval for its
Site-Rite Prevue Ultrasound System and Pinpoint Gel Cap and Needle
Guide. It has released this technology combination in the market.
The company introduced the Lutonix drug-coated balloon in Europe in
the month of July.
Furthermore, C.R. Bard remains committed to delivering incremental
returns to investors by leveraging its solid balance sheet, healthy
free cash flow and earnings power. The company's share buyback
program coupled with a hike in dividends are deemed to be the best
strategic moves adopted to attract investors. This strategy also
positions Bard in a positive light amidst the tough macroeconomic
However, difficult austerity measures in Europe and utilization
pressure are affecting C.R. Bard's double-digit top-line growth.
While positive returns from the company's businesses in emerging
markets are keeping the company within its guidance, currency
headwinds are affecting the company's gross margins adversely.
A lackluster pricing environment for the devices offered by the
company can be accredited to tough competition and a weak hospital
equipment purchase environment. Government-mandated
healthcare reforms in the U.S. have led to a less flexible pricing
environment and may pressure prices across the board. Moreover, the
company continues to face procedure volume headwinds in the
Increasing competition from strong players like
Johnson & Johnson
) also remains a matter of concern. The stent business is facing
competition in superficial femoral arteries (SFA) in the domestic
market. Our Neutral recommendation on the stock carries a
short-term Zacks #3 Rank (Hold).