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Inside Becton Dickinson’s Financial Guidance for 2017

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Jan. 4 2017, Updated 9:05 a.m. ET

Sales guidance for 2017

Becton, Dickinson and Company (BDX), or BD, has projected a decrease of approximately 3%–3.5% in its fiscal 2017 sales. The company expects its 2017 sales to be hit due to the divestiture of its Respiratory Solutions business, which was completed in October 2016. However, on a comparable currency neutral basis, BD’s revenues in fiscal 2017 are expected to increase 4.5%–5%.

In comparison, its peers Medtronic (MDT), Abbott Laboratories (ABT), and Boston Scientific (BSX) are expected to witness year-over-year sales growth of approximately 2.8%, 2.5%, and 11.8%, respectively, in fiscal 2017.

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Earnings and profit margin guidance

Becton, Dickinson and Company (BDX) reported strong adjusted diluted EPS (earnings per share) of $8.59 in fiscal 2016. It is expected to register fiscal 2017 adjusted diluted EPS in the range of $9.45–$9.55, representing growth in the range of 10%–11%. This includes an ~1.5% Respiratory Solutions business divestiture dilution.

Becton, Dickinson and Company (BDX) expects to register a gross profit margin in the range of 53%–54% in 2017. The underlying operating margins are expected to improve by 175–225 basis points, excluding the impact of currency headwinds and pension headwinds.

BD expects to decrease its R&D investment in 2017, from 6.6% of total sales in 2016 to around 6%–6.5% in 2017. Its SG&A (selling, general, and administrative) expenses are also expected to fall in 2017, from 24.1% of total sales in fiscal 2016 to around 23.5%–24% in fiscal 2017.

Moreover, BDX is on track to reduce its debt to 3x its gross leverage by March 2017, as committed after the acquisition of Carefusion. The company’s current leverage stand at 3.3x gross leverage.

To participate in the company’s growth potential, investors can consider the Health Care Select Sector SPDR ETF (XLV). BDX accounts for ~1.4% of XLV’s total holdings.

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