Becton Dickinson’s strategic expansion through its Critical Care acquisition, combined with strong organic growth and operational efficiency, positions the company for sustained growth in the medical technology sector. The company’s most recent quarterly performance showed impressive revenue growth of 6.9% and an 11.4% increase in earnings per share, demonstrating strong execution capabilities.
But here’s why we keep this company in the Buy column: its commitment to innovation through its BD 2025 plan, coupled with a 53-year track record of dividend increases and robust cash flow generation, makes it an attractive investment opportunity for the long-term.
Meanwhile, the stock trades at a modest 16.2 times the company’s forward earnings forecast.
BECTON DICKINSON & CO. (New York symbol BDX; www.bd.com) operates through three segments: Medical (50% of revenue) makes an array of devices for hospitals, doctors’ offices and other clients in health care; Life Sciences (26%) sells products for collecting and shipping biological specimens as well as equipment for detecting diseases; and Interventional (24%) makes stents, catheters, needles, incontinence devices and surgical tools.
The U.S. supplies 58% of Becton’s revenue.
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Becton recently acquired the Critical Care product group of Edwards Lifesciences Corp. (New York symbol EW). This business makes equipment to monitor the vital signs of patients in hospitals, nursing homes and other healthcare facilities.
The company paid $3.9 billion for this business. Becton partly funded this with $2.56 billion in new loans. That increased its long-term debt to $17.94 billion as of September 30, 2024. That’s still a moderate 27% of its market cap.
The new operations will add roughly $900 million to Becton’s annual revenue. As well, Critical Care’s revenue is rising by about 6% to 7% annually.
Growth Stocks: Becton Dickinson’s strategic expansion fuels rising revenues and earnings
In its fiscal 2024 third quarter, ended September 30, 2024, Becton’s revenue rose 6.9% to $5.44 billion from $5.09 billion. Earnings gained 11.4%, to $3.81 a share from $3.42.
The company typically earmarks 6% of revenue to the improvement of products and the development of new ones. Under its BD 2025 plan, the company plans to launch over 100 new products by the end of fiscal 2025. It expects those new products will increase its annual revenue by 5.5%. Becton is also dropping less-profitable products.
For fiscal 2025, earnings per share should rise about 9% to $14.35 a share. The stock trades at 16.2 times that estimate. That’s a reasonable p/e when you consider that the company spends an impressive 6% of its revenue on research, which hurts its earnings.
Becton raised your quarterly dividend by 9.5% with the December 2024 payment, to $1.04 a share from $0.95. The new annual rate of $4.16 yields 1.8%.
Recommendation in Wall Street Stock Forecaster: Becton Dickinson & Co. is a buy.
