On February 3, 2016, Becton Dickinson (or BD) (BDX) released its 1Q16 earnings. BD beat the earnings consensus for EPS in 1Q16 and managed to meet the company’s quarterly EPS guidance. But it failed to meet the consensus revenue estimates. After the announcement, BD’s share price fell approximately 2.7% from $145.05 on February 2, 2016. The fall was attributed to lower-than-expected revenues and the impact of the strong US dollar on the company’s earnings. BD stock has fallen about 6% since its 4Q15 earnings results reported on November 3, 2015.
BD’s strong fundamentals
BD reported strong operational growth for both business segments, BD Medical and BD Life Sciences. They both registered growth in revenues and margin improvements. In 1Q16, the decline in oil prices impacted raw material prices, which contributed to the company’s operational efficiencies.
CareFusion’s synergies and expanded product portfolio with new innovative products continued to strengthen BD’s operational and financial capabilities. A notable number of these were taken with the acquisition of CareFusion. Factors such as a low flu season, weaker emerging markets, and currency headwinds continued to have a strong negative impact on the adjusted growth numbers. But BD still remained a fundamentally strong company and an attractive growth stock with long-term investment potential due to its strong, diversified product portfolio, its geographic mix, and CareFusion’s successful integration.
The outlook for the US medical device industry continues to be impacted negatively due to the strong US dollar. Some of the biggest players in the industry such as Abbott Laboratories (ABT), Thermo Fisher Scientific (TMO), and Boston Scientific (BSX) have also witnessed a share price decline over the past quarter.
Investors can gain a diversified exposure to Becton Dickinson by investing in the iShares MSCI USA Minimum Volatility ETF (USMV). BD accounts for 1.2% of the total USMV holdings.