Becton, Dickinson and Company BDX, popularly known as BD, is poised for growth in the coming quarters thanks to a number of product launches over the past few months. The optimism led by a solid performance in the first quarter of fiscal 2023, along with some regulatory approvals, is expected to continue to contribute. Forex troubles and significant consolidation persist.
Over the past year, this No. 2 (Buy) Zacks stock is down 10.8%, compared to the industry’s 6.3% decline and the S&P 500’s 8.4% decline.
The renowned medical technology company has a market capitalization of USD 67.06 billion. The company forecasts growth of 7.8% over the next five years and expects to maintain its strong performance. BD has delivered an earnings surprise of 6.5% on average over the past four quarters.
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Let’s dive deeper.
Legal Permissions: BD has made impressive strides on the regulatory front, which makes us optimistic. Last month, the company received FDA clearance for the BD Onclarity HPV (Human Papillomavirus) Assay for use with the ThinPrep Pap test.
In the same month, BD received the EUA from the FDA for a new combination molecular diagnostic test for SARS-CoV-2, Influenza A+B and Respiratory Syncytial Virus – BD Respiratory Viral Panel Assay for the BD MAX System.
Product launches: We’re optimistic about BD’s numerous product launches lately. Last month, the company announced a new instrument for single-cell multiomics analysis – the BD Rhapsody HT Xpress System – that will enable scientists to conduct high-throughput studies without compromising sample integrity.
During its fiscal 2023 first-quarter earnings call that same month, BD announced that it had launched PosiFlush SafeScrub, a product in its medical segment.
Strong Q1 results: BD’s solid results for the first quarter of fiscal 2023 give us cause for optimism. Improvements in overall base revenues and robust performances from the majority of its segments and in the United States were noted. Strength in BD’s segment’s business units was also evident during the quarter. BD’s recent agreement with Biocorp and a co-exclusive commercial agreement with Magnolia Medical Technologies, Inc. are encouraging.
Disadvantages
Significant Consolidation: The medical device industry has seen significant consolidation, resulting in companies of greater size and market presence than BD. As a result, competition among medical device suppliers in the provision of goods and services has increased. Further consolidation in the industry could intensify competition among medical device suppliers and put additional pressure on the demand and prices of BD’s products.
Forex Problems: BD derives a significant portion of its revenue from international operations. BD’s revenue reporting for its operations outside the United States may be adversely affected by fluctuations in exchange rates. BD cannot predict with certainty changes in exchange rates or the extent to which such risks can be mitigated.
estimation trend
BD is seeing a positive trend to revise estimates for fiscal 2023. Over the past 90 days, the Zacks consensus estimate for its earnings has moved up 1.7% to $12.14.
Zacks consensus estimate for the company’s second-quarter fiscal 2023 revenue is $4.66 billion, indicating a 7% decrease from reported figures for the year-ago quarter.
This compares to our second quarter revenue estimate of $4.64 billion.
Other key picks
A few other high-ranking stocks in the broader medical space are Hologic, Inc. HOLX, McKesson Corporation MCK and Avanos Medical, Inc. AVNS.
Hologic, which currently holds a #2 Zacks rank, has an estimated long-term growth rate of 15.2%. HOLX’s earnings beat Zacks’ consensus estimate for all subsequent four quarters, with an average increase of 30.6%.
You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks can be found here.
Hologic is up 11.2% while the industry was down 13% over the past year.
McKesson, which currently holds a Zacks rank #2, has an estimated long-term growth rate of 10.4%. MCK’s earnings beat estimates in two of the last four quarters and missed in the other two quarters, averaging a 3.4% increase.
McKesson is up 21.9% while the industry was down 6.3% over the past year.
Avanos, which currently holds a Zacks rank of #2, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings beat estimates in all of the last four quarters, with the average increase coming in at 11%.
Avanos is down 15.1% compared to the industry’s 13% decline last year.
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