Becton Dickinson Raised Its 2017 Guidance, Expects Better Margins



2017 guidance

Becton Dickinson (or BD) (BDX) expects to register a strong performance in the last quarter of fiscal 2017 and thus register a robust 2017 performance. BD announced its 3Q17 results on August 3, 2017. However, it failed to meet analysts’ revenue estimates due to the higher-than-expected negative impact of its US dispensing business model changes and the continued impact of the divestiture of BD’s respiratory solutions business.

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BD reaffirmed its currency neutral revenue guidance as well as EPS (earnings per share) guidance for fiscal 2017 during its 3Q17 earnings results announcement on August 3, 2017. That’s due to the company’s strong year-to-date performance. It raised its adjusted earnings guidance for 2017 due to the favorable foreign currency movement.

Revenue guidance

For fiscal 2017, BD expects to report currency-neutral revenue growth in the range of 4.5% to 5.0% on a comparable basis. That includes an approximate $50.0 million negative impact from its US dispensing business model changes. The guidance includes a 4.5% to 5.0% rise in BD Medical and a rise of 4.0% to 5.0% in BD Life Sciences. The company also expects a slight negative impact from pricing pressures.

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EPS guidance

BD reaffirmed its fiscal 2017 EPS guidance of $9.70 to $9.80 on a currency-neutral basis. That represents approximately 15.0% to 17.0% of underlying EPS growth. US dispensing model changes make up a 2.0% to 3.0% negative impact on fiscal 2017 EPS guidance. BD, however, raised its adjusted EPS guidance on the back of better foreign exchange rates, which led to a moderation of currency headwinds for the company. The updated guidance range is $9.42 to $9.47.

Investors interested in participating in BD but diversifying company-specific risks can invest in the Vanguard Dividend Appreciation ETF (VIG), which invests ~1.2% in BD.

Margin guidance

BD expects to register better margins in 4Q17 due to the comparatively lower R&D (research and development) expenditure in the last quarter of fiscal 2017 and easier comparables. For fiscal 2017, BD expects to drive 220 basis points to 225 basis points of margin expansion.

Its Medication Management Solutions business is expected to benefit from the timing of orders pushed to 4Q17. However, Medication and Procedural Solutions could experience tough comparables.

BD’s competitors Zimmer Biomet Holdings (ZBH), Thermo Fisher Scientific (TMO), and Abbott Laboratories (ABT) are expected to register revenue growth of 1.9%, 8.4%, and 26.9%, respectively, in 2017.

Next, let’s look at BD’s latest analyst recommendations.


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