Earnings Recap: Becton Dickinson, Health Care’s Safe Bet
Posted on: July 25, 2008 - Email Article - Printable Version
The word on the street is that big pharma is hurting and investors maybe wondering where t
hey can see growth. I personally enjoy the investing challenges health care presents, it just means more research and better timing to find the diamonds in the rough. Do not get me wrong, big pharma is not bad, in fact most companies are expanding their reach by acquiring small biologic shops or seeking fruitful deals to grow in the generic drug market. However, there is one thing generic, biotech, and big pharma have in common, they fall under FDA regulatory power. The latest increase in approval times has had many companies rethinking their strategy to continue growth. I would like to introduce to you a company who operates well outside of FDA authority in an ethical and profitable manner.
Meet BDX
Becton, Dickson and Company [BDX: 79.00, +0.63 (+0.80%)] is a $21 billion company that engages in the manufacturing and sales of medical devices, instruments and compounds internationally. The company operates under three segments, Medical, Diagnostics, and Biosciences. Over the three segments, BDX provides critical care devices, surgical tools, needles, drug distribution tools, blood screening systems, and systems to help aide in the manipulation of cells and organic compounds.
Comparables
- P/E (ttm): 20.94x
- EPS (ttm):$4.09
- 5 Year EPS Growth Rate: 13.48%
- PEG: 1.44x
- ROI: 17.23%
All data from Reuters Online except PEG
The company announced quarterly earnings on Thursday, citing strong global sales and a weak dollar for an EPS of $1.18 beating the street by $.08. The medical division saw revenue rise over 14% to $1.87 billion as hospitals worldwide increased demand for the essential devices and tools BDX provides. The company increase guidance citing EPS growth of 16% over previously stated growth of 14%. Analyst across the street remain bullish on BDX as it has better prospects that its peers but seems to trade in line with them.
BDX, Invest or Not?
In my humble opinion, BDX seems to be a company with solid footing that can provide great exposure to the health care sector. The lack of distractions from regulation and solid international growth can aide BDX to continue it’s growth story. The necessity for these hospital basics will never go away, needles, syringes and other vital devices help ensure hospitals provide great care to their customers. Keeping in mind, that the diagnostics and biologics segments are still growing and provide a great compliment to BDX’s medical unit. It will be interesting to especially see biologics grow as more drugs begin to utilize the power of biologics to cure some of the world’s most widespread diseases. In a time where health care investors are seeking growth and want to take advantage of the weak dollar, BDX provides the best answer to the problem.
- Santosh Sankar
Disclaimer: The mutual fund the author is associated with is long BDX.
The Following Stocks Were Mentioned In This Article: BDX
Comments
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor