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Here's Why You Should Hold Becton, Dickinson (BDX) Stock Now

With a market capitalization of approximately $69.58 billion, Becton, Dickinson and CompanyBDX , also known as BD, is expected to benefit from focus on overseas markets, product launches and acquisition-driven strategy.Lower demand for healthcare products, increasing competition, significant exposure to foreign exchange volatility and higher debt level are major headwinds.

Which Way Are Estimates Treading?

For the current quarter, the Zacks Consensus Estimate for earnings is pegged at $2.92, reflecting an increase of 21.7% on a year-over-year basis. The same for revenues is pegged at $4.36billion, showing an increase of 37.8% year over year.

For 2018, the Zacks Consensus Estimate for revenues is pinned at $15.95 billion, reflecting a rise of 33.9% year over year. However, the same for earnings is pegged at $11.01, showing growth of16.1% year over year.

The stock has a Zacks Rank #3 (Hold).

Becton, Dickinson and Company Price and Consensus

Becton, Dickinson and Company Price and Consensus | Becton, Dickinson and Company Quote

Here we take a quick look at the primary factors that have been plaguing BD and discuss the prospects that ensure the stock's near-term recovery.

What's Deterring the Stock?

Lower reimbursements for medical products and services may put pressure on the prices for the company's products. Also, longer sales cycles and slower adoption of new technologies will have negative impact on the top line.

Currently, increased pressure related to resin pricing is a major headwind.

Why Should You Retain BD?

BD is focused on expansion into emerging overseas markets.

Recently, the company announced the commercial availability of the CE-IVD marked PAXgene Blood ccfDNA tube in the European Economic Area and Switzerland. Kiestra installations, strength in core microbiology in Diagnostic Systems and strong sales of clinical instruments in the Biosciences unit boosted growth. Strength in pre-filled flush devices in MPS and Pharmaceutical Systems also contributed to international growth.

The combination of BD and C.R. Bard boosts the company's growth profile in developed markets. For fiscal 2018, BD estimates developed market growth at around 4% on a reported basis. On an adjusted basis, the markets are expected to grow 4.5% year over year, excluding the estimated 50basispoints impact from the U.S. dispensing change and the hurricane in Puerto Rico.

Coming to guidance, the company expects sales to improve 31.5% on a reported basis in 2018, compared with the previous range of 31-31.5%. At constant currency, revenues are expected to grow 5.5% compared with the previous projection of 5-5.5%.

Earnings are expected in the range of $10.95-$11.05 compared with the previous projection of $10.90-$11.05. This represents growth of approximately 15.5-16.5% over fiscal 2017 levels and 12% at cc.

Per management, the acquisition of C.R. Bard is expected to prove accretive to adjusted earnings per share (EPS) on high single-digit basis in fiscal 2019.

Shares of BD have rallied 35.6%, outperforming the industry 's growth of 17.3% in a year's time.

Key Picks

A few better-ranked stocks in the broader medical space are athenahealth ATHN , Intuitive Surgical ISRG and Veeva Systems VEEV .

athenahealth has a long-term expected earnings growth rate of 17.6%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Intuitive Surgical's expected long-term earnings growth rate is 14.7%. The stock flaunts a Zacks Rank #1.

Veeva Systems' long-term earnings growth rate is projected at 19.3%. The stock sports a Zacks Rank #1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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