Here's Why You Should Hold on to Becton, Dickinson Stock Now

Becton, Dickinson and Company BDX, also known as BD, is likely to gain from a series of recent developments and a solid guidance. However, the company expects to witness tariff-related headwinds in the current fiscal.

In a year’s time, shares of BD have gained 27.2% compared with the industry’s 9% rise. Meanwhile, the S&P 500 Index has rallied 29%.

With a market capitalization of $73.56 billion, BD is engaged in the development, manufacture and sale of medical devices, instrument systems and reagents. The company’s earnings are anticipated to grow 11.1% over the next five years. The trailing four-quarter positive earnings surprise js 0.5%, on average.

Let’s delve deeper into the factors that substantiate BD’s Zacks Rank #3 (Hold) at present.

Factors to Boost BD

A series of positive developments and product launches are expected to expand BD’s customer base.

The company has announced the submission of a pre-market approval (PMA) to the FDA for an expanded version of its BD Onclarity HPV (human papilloma virus) Assay. Per management, the PMA submission is a significant step by BD toward enhancing women’s health and cancer portfolio. (Read More: BD's Onclarity HPV PMA Submission to Boost Women's Health)

Last month, BD announced its latest advancement in combating antimicrobial resistance with new analytics integrated into the company's connected medication management platform — BD HealthSight Clinical Advisor.

That’s not all. BD is looking forward to the launch of BD Intevia — the company’s first device to combine syringe and auto injector technology. In the Life Science segment, the company plans to launch BD COR high throughput molecular system for which management continues to seek regulatory authorizations. At the Interventional segment, the launch of Arctic Sun Stat will boost BD's informatics capabilities.

It is encouraging to note that, BD expects fiscal 2020 revenue growth to be driven by recent product launches across all three segments and strength in both developed and emerging markets.

In fact, for fiscal 2020, BD expects revenue growth of 4-4.5% year over year and 5-5.5% at constant currency (cc). Adjusted earnings per share are expected between $12.50 and $12.65, indicating growth of 7-8.5% from fiscal 2019. At cc, growth is expected projected in the range of 9.5-11%.

What’s Deterring the Stock?

Management at BD expects a few headwinds to mar the company’s prospects in fiscal 2020.

Tariffs are expected to impact BD’s growth by 100 basis points, while foreign exchange might deal a 250-bp blow.

Resultantly, BD expects its fiscal first-quarter EPS between $2.55 and $2.65.

Becton, Dickinson and Company Price and Consensus

 

Becton, Dickinson and Company Price and Consensus

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

Which Way Are Estimates Headed?

For fiscal 2020, the Zacks Consensus Estimate for revenues is pegged at $18.03 billion, indicating an improvement of 4.3% from the year-ago quarter’s reported figure. For adjusted earnings, the same stands at $12.57 per share, suggesting growth of 7.6% from the year-ago reported figure.

Stocks to Consider

Some better-ranked stocks from the broader medical space are DaVita Inc. DVA, DexCom, Inc. DXCM and HealthEquity, Inc. HQY. While DaVita and HealthEquity sport a Zacks Rank #1 (Strong Buy), DexCom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita has a long-term earnings growth rate of 23%.

HealthEquity has a long-term earnings growth rate of 25%.

DexCom’s fourth-quarter earnings growth rate is projected at 31.5%.

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