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Becton Dickinson (BDX) Earnings Surpass Estimates in Q3

Becton, Dickinson and Company BDX, also known as BD, reported third-quarter fiscal 2020 adjusted earnings per share (EPS) of $2.20, which beat the Zacks Consensus Estimate of $2.05 by 7.3%. The bottom line however dropped 28.6% on a year-over-year basis and fell 25% at constant currency (cc).

The company raked in revenues of $3.86 billion, missing the Zacks Consensus Estimate of $3.93 billion by 1.9%. The reported figure declined 11.4% from the year-ago quarter. At cc, revenues fell 9.4%.

Segment Details

BD Medical

In the quarter under review, the company reported worldwide revenues of $2.12 billion, down 8.2% from the year-ago quarter and 6% at cc. Per management, the downside can be attributed to performance in the Medication Delivery Solutions unit. However, growth in the Medication Management Solutions and Pharmaceutical Systems units partially offset the downside.

BD Life Science

Worldwide revenues in the segment totaled $0.95 billion, down 10.1% year over year and 7.8% at cc. Per management, lackluster performance by the Preanalytical Systems  and Biosciences units resulted in the downside. However, robust growth in the Diagnostic Systems unit, which was driven by sales related to COVID-19 diagnostic testing, mainly on the BD Max platform, partially made up for the downside.

BD Interventional

This segment generated worldwide revenues of $0.78 billion, down 20.3% from the year-ago quarter and 19.2% at cc. This was due to the performance in the Surgery and Peripheral Intervention units which indicates continued deferral of elective procedures as a result of the COVID-19 pandemic.

Geographic Results

US

In the fiscal third quarter, revenues in the United States declined 13.1% to $2.12billion. Per management, performance in the United States reflects the net impact of COVID-19 across each of the three operating segments. Within the United States, the Diagnostic Systems unit witnessed strong revenue growth due to COVID-19 testing.

International

Revenues outside the United States grossed $1.74 billion, down 9.2% from the year-ago quarter. At cc, revenues at the segment fell 4.7%. Per management, this downside was owing todeclines in China and Latin America, partially offset by growth in Europe and EMA.

Becton, Dickinson and Company Price, Consensus and EPS Surprise

 

Becton, Dickinson and Company Price, Consensus and EPS Surprise

Becton, Dickinson and Company price-consensus-eps-surprise-chart | Becton, Dickinson and Company Quote

Margin Analysis

In the third quarter, gross profit amounted to $1.66 billion, down 19.9% from the prior-year quarter tally. Gross margin was 43.1%, down 462 bps from the prior-year quarter.

Adjusted operating profit amounted to $418 million, down 41.6% from the year-ago figure. Adjusted operating margin was 10.8%, down 562 bps.

Guidance

Full fiscal 2020, revenues are projected to decline in the range of 2.5% to3% as reported, or 1.5%to 2% on a currency-neutral basis. The Zacks Consensus Estimate for the same is pegged at $16.98 billion.

Full fiscal 2020, adjusted diluted EPS is estimated in the range of $9.80 - $10.00. This reflects a decline of around 14 % to 16%, or 12.5% to 14.5% on a currency-neutral basis from fiscal 2019 adjusted diluted EPS of $11.68. The Zacks Consensus Estimate for the same is pegged at $10.36.

Wrapping Up

BD exited the fiscal third quarter on a mixed note. Within the United States, the Diagnostic Systems unit witnessed strong revenue growth due to COVID-19 testing. The company continues to see solid demand for its product portfolio that supports the global COVID-19 response, especially the recent launch of its COVID-19 rapid point-of-care antigen test.

However, decline across each of the core segments during the quarter is a concern. Both domestic and international revenues decreased year over year in the quarter under review. Contraction in both the gross and adjusted operating margins raises concern. Unfavorable foreign currency impacted BD’s quarterly bottom line.

Zacks Rank and Key Picks

BD currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, PerkinElmer, Inc. PKI and OPKO Health, Inc. OPK. While PerkinElmer sports a Zacks Rank #1 (Strong Buy), the other two sport a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.

PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.

OPKO Health reported second-quarter 2020 EPS of 5 cents against the Zacks Consensus Estimate of a loss of 7 cents per share. Revenues of $301.2 million surpassed the consensus estimate by 28.4%.

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