Becton Dickinson (BDX), or BD, is set to release its fiscal 3Q17[1. fiscal 3Q17 ended June 30, 2017] results on August 3, 2017. In a Reuters survey of 15 brokerage firms, ~66.7% of the analysts rated BD as a “buy,” and 33.3% rated the company as a “hold.” None of the analysts rated BD as a “sell.”
BD is one of the largest medical devices companies in the United States, and it primarily sells diagnostic tools and laboratory supplies. It has positioned itself as a leader in the medication management market with the CareFusion acquisition in 2015.
With the acquisition of C.R. Bard, BD could expand and strengthen its presence in the oncology and surgery space. For more information on the deal, please read BD to Acquire C.R. Bard: A Big-Ticket Medical Device Acquisition.
The chart above shows a recommendation summary for BD over the next year. On July 27, 2017, the stock’s consensus 12-month target price was $198.60, which amounts to an approximately -2% return potential based on BDX’s closing price of $202.70 on July 26, 2017.
According to analysts’ most recent recommendations, the lowest one-year target price for BD is $146.00. This target implies a maximum downside risk of approximately -57% on BD over the next 12 months. The company’s highest one-year target price is $230.00, which implies an ~27% maximum return potential over the next 12 months.
Peers Medtronic (MDT), Thermo Fisher Scientific (TMO), and Baxter International (BAX) have average broker target prices of $92.40, $196.20, and $67.30, respectively. These figures imply returns of 9.1%, 12%, and 11.5%, respectively, in the next 12 months.
Recommendation upgrades and downgrades
On July 25, 2017, Jefferies reaffirmed its “buy” rating on BDX stock with a target price of $230.00.
On June 30, Raymond James upgraded its recommendation on BDX stock from “outperform” to “strong buy” and raised the target price on the stock from $210.00 to $226.00. The firm views BDX stock as undervalued and is upbeat about the company’s potential to generate free cash flows and strong above-average organic growth and EPS outlook.
In April, EverCore ISI also upgraded its recommendation on the stock while raising its target price from $186.00 to $200.00. EverCore ISI also believes that BD could register strong organic growth going forward. With the acquisition of C.R. Bard, the firm expects BD to have strong long-term potential.
Investors can gain exposure to BD by investing in the iShares Edge MSCI Min Vol USA ETF (USMV), which invests 1.6% of its portfolio in BDX.
In the next article, we’ll look at BD’s 3Q17 revenue expectations.