Becton Dickinson is a Powerhouse with CR Bard

Stock (Symbol)

Becton Dickinson (BDX)

Stock Price

$232

Sector

Healthcare

Data is as of

January 20, 2018

Expected to Report

Feb 6

Company Description

BDX is a global medical technology company engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, life science researchers, clinical laboratories. The Company operates through two segments: BD Medical and BD Life Sciences. Source: Thomson Financial

Sharek’s Take

Becton Dickinson (BDX) is acquiring C.R. Bard (BCR), merging two 100 year old companies with long histories of providing equipment to hospitals, and delivering investors with double-digit returns for many years. Becton Dickinson has manufactured syringes, catheters, lab equipment, diagnostic tests, and other disposable items for hospitals since 1897. The company has been a perennial 8% to 10% grower, unless it makes a big acquisition that causes profits to surge like in 2015 when it acquired CareFusion, a maker of precision drug dispensing equipment. CareFusion gave Becton, Dickinson a more complete menu of medical products to hospitals and Becton can also use its deep International network to sell CareFusion products. And now C.R. Bard, which was founded in 1907, takes things to a whole other level with its catheters and stents. BDX is a very safe stock that has produced growth around twice the rate of the S&P 500. It possesses an Est. LTG of 14% per year in addition to a 1% yield. The company has a history of growth dating back a century, and a dividend that’s been raised for close to 50 years. BDX stock sells for around 20x earnings, a reasonable price for a quality long-term investment. (Note: this report is our 2017 Q4, which comments on BDX’s qtr ending Sept 30th. BDX just pre-announced its Jan 31st an hour ago, which will be covered at a later date).

One Year Chart

Last qtr (Sept 30th) BDX had sales decline 2% as profits grew 13% and beat estimates slightly. 2018 profit estimates increased from $11.41 to $12.65. Qtrly Estimates are 3% , 14%, 18% and 21%. The Est. LTG just increased from of 10% to 14% — nice! Still, I feel this is a 10% grower long-term.

Fair Value

With CR Bard set to be included in Becton’s 2018 financials, my Fair Value is 23x earnings, which gives us a Fair Value of $250 a share in 2018 and $291 in 2019. There’s good upside here for conservative long-term investors.

Bottom Line

Becton, Dickinson is one of the safest stocks out there, BDX has been in business more than a century and has raised its dividend for close to 50 years. Plus, C.R. Bard will not be able to produce sales and perhaps profit growth for 2018. This company will be a powerhouse in the hospital supply business, which provides steady revenue growth. BDX ranks 24th in the Conservative Portfolio Power Rankings.