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Inside IHI’s Large-Caps: Becton Dickinson Rose on Good 2Q16

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Reviewing IHI large-caps

The large-cap stocks of the iShares US Medical Devices ETF (IHI) rose by 0.7%. It replicating the performance of the ETF itself and outperformed the SPDR S&P 500 ETF’s (SPY) returns on May 5, 2016. IHI holds 13 large-cap stocks in its portfolio. Among them, ten stocks advanced and only one stock declined. On a YTD (year-to-date) basis, IHI’s large-cap stocks collectively returned 11.2%. IHI large-cap stocks account for 75% of IHI’s portfolio.

The above graph reflects the daily changes of IHI large-caps, IHI, and SPY. As of May 5, 2016, IHI large-caps have risen 0.2%, while SPY has fallen 0.7%.

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Becton Dickinson shares rise on good 2Q16 earnings

Becton Dickinson (BDX) announced its 2Q16 earnings on May 5, 2016. Below are important highlights from its earnings press release:

  • adjusted revenues of $3.1 billion, an increase of 49.7% compared to 2Q15 on a reported revenues basis
  • adjusted diluted EPS (earnings per share) of $2.18 compared to $1.61 in 2Q15
  • revenues of $2.1 billion an increase of 93.1% on a year-over-year reported basis, driven by an increase in sales in the medical segment –The life sciences segment saw a revenue decline of 10% to $936 million.
  • $1.7 billion in US market revenues, an increase of 99.6% compared to 2Q15
  • $1.4 billion in revenues outside the US market, an increase of 13.5% over 2Q15
  • raised its 2016 adjusted diluted EPS to $8.50–$8.57 compared to earlier guidance of $8.37–$8.44

Becton Dickinson closed at $160.43 and was trading above the 20-day moving average. The stock has risen 4.1% YTD. It’s trading at a 2016 forward PE (price-to-earnings) multiple of ~19.0x. Below are the multiples for some of its peers in IHI:

  • Boston Scientific (BSX): 20.1x
  • Baxter International (BAX): 27.4x
  • Stryker (SYK): 19.0x

Becton Dickinson has a book value of $34.10 per share. At its current price, the stock is trading at a PBV (price-to-book value) of 4.7x. Becton has a weight of 5.7% in IHI’s portfolio.

In the final part of our series, we’ll look at IHI’s mid-caps, especially Masimo.

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