Earnings Preview: Becton Dickinson (BDX)

Becton Dickinson (BDX) is slated to report third-quarter 2010 results on Thursday, July 29, ahead of the opening bell. During the second-quarter conference call, Becton Dickinson stated that it expects fiscal 2010 (ending September 30) revenue to increase about 6% year over year, compared with the previous guidance of 7%.

Becton also set a target of 2% to 4% growth in earnings per share for the year, which is expected between $5.05 and $5.15. The current Zacks Consensus Estimate for the third quarter is $1.25, representing roughly 4% year over year decline.

Second-Quarter Recap

Becton Dickinson reported second-quarter fiscal 2010 earnings of $1.24 per share, beating the Zacks Consensus Estimate by a penny and the year-ago figure of $1.18.

Total revenue in the second quarter increased 7.0% year over year to $1.845 billion, with growth registered in all the business segments. Excluding foreign currency translation, total revenue increased 6.6% year over year.

Estimate Revision Trend

Agreement: Estimates for Becton Dickinson are on a downward trend showing a clear directional agreement. Out of 15 analysts covering the stock, 2 have lowered their estimates for the third quarter over the last week and 9 did the same over the past month. None raised estimates over the preceding 7 and 30 days.

Likewise, estimates for fiscal 2010 have moved in the downward direction. Out of 12 analysts, 1 has lowered his/her estimate in the last 7 days while 5 made negative revisions over the past 30 days.

Magnitude: With respected to the magnitude of revisions, estimates for the third quarter has dropped by a couple of pennies over the past month while remaining unchanged over the last week. The magnitude of revisions for fiscal 2010 has been static over the last 7 days with a drop of 2 cents over the past 30 days.

Our Take on Becton Dickinson

We remain cautious about Becton Dickinson due to the lack of any major short-term catalyst. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth, which is not expected to continue, given that the US market is predominantly already penetrated. Further, Becton Dickinson faces a wide range of competitors in each of its three business segments.

We are, however, hopeful that growth may recover in the future with the European Union adoption of safety requirements, recovery in research markets and continued growth in flow cytometry in the clinical setting. Becton Dickinson’s preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field. We currently have a Neutral recommendation on the stock.

BECTON DICKINSO (BDX): Free Stock Analysis Report

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