Tags: Becton | Dickinson | healthcare | BDX

Becton, Dickinson: Global Healthcare Growth

By    |   Thursday, 03 Nov 2011 03:18 PM

For a $17 billion market cap healthcare company, Becton, Dickinson & Co. (BDX) stock seems to fly under the radar. For investors, BD provides global yet conservative exposure to the healthcare sector.

BD divides its business into three segments: medical systems and supplies, diagnostics and biosciences equipment. Medical accounts for just over half of revenues; diagnostics sales bring in over 30 percent; and biosciences is responsible for the balance. For the first three-quarters of the 2011 fiscal year, 56 percent of sales were generated internationally, leaving 44 percent from U.S. operations.

Becton, Dickinson counts June 30 as the end of the company's 2011 third quarter. Through the three quarters, revenues were $5.78 billion, up 5 percent from $5.5 billion a year earlier. Net income from continuing operations for the nine months was $4.23, up 14 percent from $3.70.

The full-year consensus earnings forecast is $5.63, compared to $4.90 earned in 2010.

Currency contributions

The recent results of BD have reaped significant benefits from positive currency exchange rates. On a currency neutral basis, revenues for nine months were up just 2.6 percent and net income rose by 8.1 percent.

The company reports both actual and currency neutral growth rates in the quarterly earnings reports. The effects of currency are real dollars, and if it works to increase profits, that is a benefit. Investors should be aware, however, that exchange rates also can hurt the bottom line.

Emerging market sales — led by China —has grown 13 percent year-over-year and accounts for a fifth of current revenues. Currency fluctuations in the emerging markets may be on different cycles than the fluctuations between the major market currencies.

Recently, the analysts at Citi Investment Research lowered their target price and rating on BDX to hold. The analysts base the rating on their forecast that the earnings multiple for the stock will shrink from 14 times earnings to 13, based on expected earnings of $6.10 in 2012.

The company reports next on Nov. 1.

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For a $17 billion market cap healthcare company, Becton, Dickinson Co. (BDX) stock seems to fly under the radar. For investors, BD provides global yet conservative exposure to the healthcare sector. BD divides its business into three segments: medical systems and...
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2011-18-03
Thursday, 03 Nov 2011 03:18 PM
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