Why Is Becton Dickinson (BDX) Down 5.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Becton Dickinson (BDX). Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Becton Dickinson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Becton Dickinson  Q2 Earnings and Revenues Top Estimates

Becton, Dickinson and Company  also known as BD, reported second-quarter fiscal 2020 adjusted earnings per share of $2.55, which beat the Zacks Consensus Estimate of $2.28 by 11.8%. The bottom line however dropped 1.5% on a year-over-year basis and fell 1.9% at constant currency (cc).

The company raked in revenues of $4.25 billion, surpassing the Zacks Consensus Estimate of $4.11 billion by 3.4%. The reported figure improved 1.4% from the year-ago quarter. At cc, revenues rose 2.4%.

Segment Details

BD Medical

In the quarter under review, the company reported worldwide revenues of $2.15 billion, down 1.4% from the year-ago quarter and 0.3% at cc. Per management, strong growth in the Pharmaceutical Systems and Diabetes Care units contributed to the upside. However, the segment’s results were offset by year-over-year declines in the Medication Management Solutions and Medication Delivery Solutions units.

BD Life Science

Worldwide revenues in the segment totaled $1.11 billion, up 5.8% year over year and 7.1% at cc. Per management, the upside was driven by solid performance in the Diagnostic Systems and Preanalytical Systems units.

BD Interventional

This segment generated worldwide revenues of $0.99 billion, up 2.8% from the year-ago quarter. At cc, revenues grew 3.3% on strong performance by the Peripheral Intervention, Urology and Critical Care units.

Geographic Results

US

In the fiscal second quarter, revenues in the United States improved 3.2% to $2.41 billion. Per management, growth in the United States was driven by a solid show by the BD Life Sciences and the Interventional units. However, a decline in the Medical segment partially offset the upside.

International

Revenues outside the United States grossed $1.84 billion, down 0.8% from the year-ago quarter. At cc, revenues at the segment grew 1.5%. Per management, International revenue growth was driven by strength in Europe and Latin America, offset by a decline in China.

Margin Analysis

In the quarter, gross profit amounted to $1.73 billion, down 12.2% from the prior-year quarter tally. Gross margin was 40.7%, down 631 bps from the prior-year quarter.

Adjusted operating profit amounted to $444 million, down 29.9% from the year-ago figure. Adjusted operating margin was 10.4%, down 465 bps.

Guidance

Due to ongoing uncertainty regarding the magnitude and extent of the COVID-19 pandemic, the company is withdrawing its fiscal year 2020 revenue and earnings per share guidance.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -18.22% due to these changes.

VGM Scores

Currently, Becton Dickinson has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It’s no surprise Becton Dickinson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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