Earnings Preview: Becton Dickinson

Becton, Dickinson and Company (BDX) is slated to report first-quarter fiscal 2011 results on Tuesday, February 8, ahead of the opening bell. The current Zacks Consensus Estimate for the first quarter is $1.29, representing an estimated year-over-year decline of 1.11%.

During the fourth quarter earnings announcement, the company had guided reported earnings per share from continuing operations for fiscal 2011 to grow about 11% to 13% to a range of $5.45 to $5.55. It expects adjusted earnings per share from continuing operations to grow in a band of 10% to 12% for fiscal 2011. During the last conference call, Becton Dickinson added that it forecasts fiscal 2011 revenues to increase about 4% year over year.

Fourth-Quarter Recap

Becton Dickinson reported fourth-quarter fiscal 2010 earnings of $1.24 per share, missing the Zacks Consensus Estimate by a penny. Total revenues increased 1% year over year (2.9% in constant currency) to $1.87 billion, with growth varying somewhat across business segments. Revenues were mostly in line with the Zacks Consensus Estimate.

Domestic sales for the quarter amounted to $832 million, up 1.4% year over year, including a negative impact of 1.8% from the flu pandemic. Overseas revenues were $1.04 billion, up 0.8% (or 4.2% in constant currency), including a negative impact of 4% from the flu pandemic in fiscal 2009. Becton Dickinson experienced higher growth in emerging markets, offset by a slowdown in European markets.

Estimate Revision Trend


The overall trend in estimate revisions for the upcoming quarter is relatively static. Of the 16 analysts covering the stock, there was no upward revision during the past 7 days accompanied by just one downward movement. Two analysts raised their estimates in the past month while two lowered their forecasts.

With regard to fiscal 2011, only one analyst (out of 17) lifted his/her estimate over the last week with no reverse movements. Over the past month, four analysts have raised their estimates while one moved in the opposite direction. The current Zacks Consensus Estimate for fiscal 2011 is $5.52, reflecting an estimated 12.7% year-over-year growth.


Given the relative lack of estimate revisions, the magnitude of revision reached a plateau, for both the past 7 and 30 days, for the forthcoming quarter. There was an increase of a cent over the past month for fiscal 2011.

Our Take on Becton Dickinson

Becton Dickinson, a leading global medical technology company, produces and markets medical devices, instrument systems and reagents. The company is dedicated to enhancing drug delivery, improving the pace of diagnosing infectious diseases and cancer and advancing R&D for new drugs.

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 U.S. 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.

Cash flow of the company remains strong and management is committed to efficiently deploying cash flow for increasing returns to shareholders through its share repurchase program.

The company competes, in niches, with different companies such as Baxter International (BAX) among others. We currently have a long-term Neutral recommendation on the stock, which is supported by a short-term Zacks #3 Rank (Hold).

BECTON DICKINSO (BDX): Free Stock Analysis Report

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