Morningstar | Becton, Dickinson Delivers 3Q Slightly Ahead of Expectations; Maintaining FVE
Becton, Dickinson and Co reported strong fiscal third-quarter results, with revenue up 5.5% on a currency-neutral basis. The company slightly ticked up its full-year guidance. We're maintaining our $225 fair value estimate and narrow moat rating; shares are slightly overvalued.All areas in the medical segment delivered good results, particularly the medication management solutions business, which was up 8.3% on a currency-neutral basis, significantly above our long-term 5% expectations. Pyxies ES was the main driver of this performance, aided by the change to the dispensing model. Medication delivery solution is also delivering results above our targets; vascular solutions (Bard's business) has significantly bolstered this segment's performance. Life sciences reported 6.8% growth at constant exchange rates, and the interventional business was up 5.1%, with peripheral and urology businesses offsetting modest weakness in the surgery unit. By geographical segment, the U.S. market was up a solid 6% and emerging markets remained the key driver of the overall growth, up 11% organically in the quarter, with China still growing strongly (13%) despite difficult comps.
The company adjusted its full-year 2018 guidance upwards on the revenue line to incorporate good third-quarter results and strong momentum so far in the fourth quarter. We are revising our forecast upwards, and we note that underlying growth of 6% for the full year would be the highest growth rate the company will have achieved in a decade. The tightened management guidance on constant-currency full-year EPS growth is in line with our forecast.
BD has also announced additional appointments of former Bard personnel to key leadership positions. The company will now have Bard people in charge of areas that we deemed to be particularly impressive within Bard: R&D productivity and culture, in addition to leadership of the interventional segment.
Becton, Dickinson and Company is a medical technology company engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products. The company's segments are: BD Medical, which produces an array of medical technologies and devices that are used to help improve healthcare delivery in a range of settings; BD Life Sciences, which provides products for the safe collection and transport of diagnostics specimens, and instruments and reagent systems to detect a range of infectious diseases, healthcare-associated infections and cancers; and BD Interventional, which provides vascular, urology, oncology and surgical products.
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