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Becton Dickinson’s Long-Term Growth Profile and Expectations

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BD’s performance and related growth drivers

Becton, Dickinson and Company (BDX), or BD, has grown tremendously over the last few years, driven by the company’s strong product portfolio, robust product pipeline, and enhanced capabilities. Over the last five years, Becton, Dickinson and Company has executed its growth strategy and achieved the targeted growth rates of 5% top-line organic growth and 10% bottom-line growth.

BD also accelerated its innovation strategy and doubled its sales from new products. The company also expanded its capabilities by investing in developing the necessary infrastructure and moving toward inorganic growth to expand its product portfolio and market presence.

The CareFusion acquisition in 2015 was Becton, Dickinson and Company’s (BDX) largest acquisition, establishing it as the leader in the medication management business. The deal led to significant margin expansions over subsequent quarters.

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Future expectations

BDX expects to register strong and sustainable performance going forward. The company has expanded across various geographies and is increasing its presence  in emerging markets that present strong growth potential. Also, the company has a robust product pipeline which it hopes could accelerate its growth.

These factors, along with a well-established leading product portfolio, could result in ~$150 million–$175 million in revenue synergies by 2019. The company has started to see top-line benefits from its Medication and Procedural Solutions (or MPS) division products, and it expects significant revenue synergies from the Medication Management Solutions (or MMS) business.

Becton, Dickinson and Company (BDX) expects to register a significant operating margin expansion going forward, resulting from the cost synergy benefits realization. The company estimates double-digit earnings growth in the coming years.

Peers Medtronic (MDT), Thermo Fisher Scientific (TMO), and Abbott Laboratories (ABT) reported operating margins of 18.9%, 12%, and 17%, respectively, in their recently ended quarters. Investors can invest in the Vanguard S&P 500 ETF (VOO) for exposure to BDX. VOO holds approximately 0.18% of its total holdings in BDX.

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