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Must-Know Investor Updates from Beckton Dickinson

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Part 4
Must-Know Investor Updates from Beckton Dickinson PART 4 OF 4

How BD Is Accelerating Its Safety Revenues after Flat Growth in 3Q17

Overview

Becton, Dickinson and Company (BDX), or BD, acquired its global safety products portfolio through the acquisition of CareFusion in 2015 and established itself as the global leader in safety products. The safety revenues continued to be strong following the acquisition.

How BD Is Accelerating Its Safety Revenues after Flat Growth in 3Q17

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The emerging market sales have had a major contribution from the sales of safety-engineered products over the quarters. However, the safety products business reported a YoY (year-over-year) revenue decline of 1% in 3Q17. The currency neutral sales growth came in flat on a YoY basis. The US safety sales were up by 1.5% while international sales fell 4.4%. Tough prior-year comparables were the major driver of lower safety sales growth. By segment, the medical safety sales fell by around 3% in the quarter, whereas the LifeSciences safety sales registered growth of 2.4%. The normalization of distributor inventory levels at major distributors in the United States was the major reason behind the lower medical safety sales.

Medtronic (MDT), Stryker (SYK), and Thermo Fisher Scientific (TMO) are BD’s major competitors in this market space in the medical technology industry in the United States.

Conversion opportunities around the globe

Despite recent slow growth in safety revenues, BD continues to have a consistent growth outlook for the business. The company expects around 50% conversion rates in Europe as customers are changing their preferences to safety-engineered products. However, emerging markets still have less than 20% conversion rates with China showing a better performance than the rest of the emerging nations. The legislative reforms in the country are the major drivers of such conversions. In Europe, conversion rates have accelerated due to the legislative changes mandating conversion to safety products by healthcare institutions. BD continues to work with the governments of various countries to help bring about policy changes.

Investors can consider the iShares Core S&P 500 ETF (IVV) for exposure to BD.

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