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Becton, Dickinson (BDX) Q1 Earnings In Line With Estimates

Zacks Equity Research

Becton, Dickinson and Company BDX posted first-quarter fiscal 2019 earnings per share (EPS) of $2.70, which were in line with the Zacks Consensus Estimate. The bottom line improved 8.9% on a year-over-year basis and 14.9% at constant currency (cc).

Becton Dickinson, also known as BD, raked in revenues of $4.16 billion, missing the Zacks Consensus Estimate by 0.1%. The reported figure surged 35.1% from the year-ago quarter. At cc, revenues rose 5.2%.

In a year’s time, the Zacks Rank #2 (Buy) stock has rallied 9.9% against the industry’s 3.8% decline and the S&P 500 index’s 2.4% rally.

Segment Details

BD Medical

In the quarter under review, BD Medical posted worldwide revenues of $2.14 billion, up 15.3% from the year-ago quarter and 17% at cc, primarily due to the acquisition of C. R. Bard. Per management, the segment's results were driven by strong performance in the Medication Management Solutions and Pharmaceutical Systems sub-units.

BD Life Sciences

Worldwide revenues in the segment totaled $1.06 billion, up 1.1% year over year and 3% at cc. Per management, revenue growth was primarily driven by strong performance in the Preanalytical Systems sub-unit.

BD Interventional

This segment posted worldwide revenues of $0.97 billion, significantly up from the year-ago $183 million. At cc, revenues grew 37.1%. The segment's results reflect strong performance by the Surgery and Urology and Critical Care sub-units.

Becton, Dickinson and Company Price, Consensus and EPS Surprise

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

Geographic Results

US

In the fiscal first quarter, revenues in the United States shot up 44.1% to $2.39 billion, primarily backed by the acquisition of C. R. Bard. Revenues grew 6% at cc. Per management, revenue growth in the United States was primarily driven by very strong performance across all three major segments.

International

Revenues outside the United States grossed $1.77 billion, up 24.6% from the year-ago quarter, thanks to the acquisition of C. R. Bard. At cc, the segment grew 4.1%. Per management, international revenue growth in the fiscal first quarter was driven by strong performances in China and the rest of Asia as well as Latin America.

Margin Analysis

In the quarter, gross profit amounted to $1.97 billion, up 27% from the prior-year quarter tally. Gross margin was 47.4%, down 300 basis points (bps).

Operating income in the quarter grossed $888 million, up significantly from the year-ago quarter’s $235 million.

Adjusted operating income summed $642 million, up 9% on a year-over-year basis. As a percentage of revenues, operating margin in the quarter was 15%, down 410 bps year over year.

Guidance Reiterated

On a reported basis, BD continues to expect fiscal 2019 revenue growth of 8.5-9.5%, primarily owing to the C. R. Bard acquisition. At cc, the same metric is anticipated to increase 5-6%. The Zacks Consensus Estimate is pegged at $17.43 billion.

For fiscal 2019, adjusted EPS are projected between $12.05 and $12.15, reflecting growth of 13-14% at cc and 10% compared to fiscal 2018. The midpoint of the latest guidance of $12.10 is marginally below the Zacks Consensus Estimate of $12.11.

Summing Up

BD exited the fiscal first quarter on a mixed note. Strong performance by the core BD Medical and Life Sciences segments buoys optimism. Also, the company continues to gain from its C.R. Bard acquisition. Domestic and international revenues increased year over year in the quarter under review. Notably, a series of product launches and regulatory approvals have boosted the stock. The company has kept its fiscal 2019 guidance intact.

On the flip side, contraction in gross and operating margins in the quarter is worrisome. Management expects unfavorable foreign currency to partially mar BD’s prospects in fiscal 2019. Stiff competition in the MedTech space adds to the woes.

Earnings of Other MedTech Majors at a Glance

Other top-ranked MedTech stocks that posted solid results in their respective quarters are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD.

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2.

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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