Becton Dickinson (BDX) Down 3.3% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Becton Dickinson (BDX). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.


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Will the recent negative trend continue leading up to its next earnings release, or is Becton Dickinson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Becton Dickinson Earnings Surpass Estimates in Q1

Becton, Dickinson and Company, also known as BD, reported first-quarter fiscal 2021 adjusted earnings per share of $4.55, which beat the Zacks Consensus Estimate of $3.14 by 44.9%. The bottom line also rose 71.7% on a year-over-year basis and grew73.6% at constant currency (cc) as well.

Revenues

For the quarter, the company raked in revenues of $5.32 billion, beating the Zacks Consensus Estimate by a marginal 0.1%. Also, the top line grew 25.8% from the year-ago quarter on a reported basis and 24.3% on a currency-neutral basis.

Segment Details

BD Medical

For the quarter under review, the company reported worldwide revenues of $2.26 billion, up 8.2% from the year-ago quarter on a reported basis and6.9% at cc,led by growth across all its four business units. Per management, this upside can be particularly attributed to growth in Medication Delivery Solutions and Medication Management Solutions business units. Also, consistent demand for its pre-fillable syringe portfolio drove the Pharmaceutical Systems unit.

BD Life Science

Worldwide revenues in the segment totaled $1.98 billion, up 76.2% year over year on a reported basis and 74.1% at cc. Per management, this upside was driven by strong sales associated with COVID-diagnostic testing solutions in the Diagnostic Systems unit on the BD Veritor Plus and BD Max platforms.

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BD Interventional

This segment generated worldwide revenues of $1.08 billion, up 6.2% from the year-ago quarter on a reported basis and 5% at cc. This was owing to the segment’s strong performance with respect to both elective and routine outpatient procedure volumes in the United States in the Surgery and Peripheral Intervention business units.

Geographic Results

US

In the fiscal first quarter, revenues in the United States grew 28.8% to $3.13 billion. Per management, solid performance in the United States reflects higher sales associated with COVID-testing solutions

International

Revenues outside the United States grossed $2.19 billion, up 21.8% from the year-ago quarteron reported basis and 18.2% on currency-neutral basis. Per management, this upside was driven by a strong performance in Europe in the BD Medical and BD Life Sciences segments.

Margin Analysis

In the fiscal first quarter, gross profit amounted to $2.7 billion, up 38.1% from the prior-year quarter’s tally. Gross margin was 51.4%, up 459 basis points (bps) from the prior-year quarter.

Adjusted operating profit amounted to $1.3 billion, up 120.1% from the year-ago figure. Adjusted operating margin was 24.3%, up 1042 bps.

Cash Position

The company exited the first quarter of fiscal 2021 with cash and equivalents amounting to $3.25 billion compared with $2.83 billion at the end of the fourth quarter of fiscal 2020.

Net cash provided by operating activities came in at $1.53 billion compared with $713 million in the year-ago period.

Fiscal 2021 Guidance

For the current fiscal year, revenues are projected to grow 12-14% on a reported basis and 10-12% on a currency-neutral basis. The company’s previously issued guidance for revenue growth was in the high single-to-low double-digit range on a reported basis. The Zacks Consensus Estimate for the same is pegged at $19.24 billion.

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For the full fiscal, adjusted EPS is estimated between $12.75 and $12.85 compared with the previously issued outlook of. $12.40-$12.60. The current projection also suggests growth of almost 25-26% from the prior fiscal year’s reported number. The Zacks Consensus Estimate for the same is pegged at $12.58.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -6.71% due to these changes.

VGM Scores

At this time, Becton Dickinson has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Becton Dickinson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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