EUR 850.00 For Business Accounts Only

Morningstar | BDX Updated Forecasts and Estimates from 11 Apr 2019

Becton, Dickinson is certainly keen on abandoning a "predictable company" moniker. After surprising the investor community four years ago with its first major acquisition in its operating history, BD doubled the CareFusion deal size in 2017 with its purchase of C.R. Bard. We are big fans of Bard, and we believe the addition of this higher-growth business, along with reinvigorated performance from BD's legacy business, should push the company to 5%-plus organic revenue growth. While the improvement may not seem particularly impressive, it is nonetheless a sizeable jump for a company that competes in product areas that have historically experienced growth below that of the broader medical sector. BD now has a product pipeline that has the potential to expand the overall size of the market and position the company as full-suite product and solutions vendor. The essential nature of BD's medical products has given the company ample cash flows for reinvestment, and BD has made conscious efforts to deploy this capital to bolster its offerings in areas such as diabetes, injectables, and biosciences. The company has also built out a massive presence in emerging markets, with its distribution and manufacturing network unparalleled in the med tech world. Now, with returns on its internal investments becoming evident (in the form of improving organic growth), the company is increasingly turning to acquisitions.The acquisition of CareFusion was the first sign that BD is departing from its century-old strategy of bolt-on acquisitions only, and the Bard deal moves the company even further out of its comfort zone. Bard brings the challenge of operating in areas where competition is deep-pocketed and research and development commitment is required. The CareFusion product suite provided many complementary opportunities to BD’s own products; maximizing Bard's potential will be more challenging. That said, we believe BD will allow Bard more autonomy, particularly as it pertains to R&D spending in areas such as peripheral artery disease. This gives us confidence in the company's postmerger goals, both on the revenue growth and synergy lines.