BD - Resultaten Q2 2005

Becton Dickinson Hitting on All Cylinders (The street)

Becton Dickinson (BDX:NYSE) outpaced estimates for its fiscal second quarter, reporting revenue growth across all segments.
The Franklin Lakes, N.J., medical device company company reported earnings of $188 million, or 72 cents a share, on sales of $1.37 billion for its second fiscal quarter ended March 31. This compares to $165 million, or 62 cents a share, on sales of $1.25 billion a year earlier.
Excluding items, earnings were 75 cents a share. The company exceeded its previous guidance of 70 cents to 72 cents a share as well as consensus estimates of 68 cents a share on sales of $1.36 billion.
In its medical segment, Becton Dickinson's worldwide sales were $732 million, a 7% increase from the prior year. Driving growth was a rise in sales of blood glucose monitoring products, thanks to the Paradigm monitoring system developed with Medtronic (MDT:NYSE) and direct-to-consumer marketing to clinics and retail pharmacies, BD Medical President Gary Cohen said during a Wednesday earnings call. Within the segment, sales of safety devices saw a benefit from increased government safety regulations worldwide.
The medical surgical unit could have grown an additional 2% to 3% if not for destocking by its biggest distributor, the company said. Two other distributors plan to reduce their inventories as well, BD said.
The diagnostics segment brought in $430 million worldwide, up 12%, thanks to strong sales of flu diagnostic tests in Japan. While the flu season during the company's fiscal first quarter was weak and was generally softer than normal in the U.S., BD Diagnostics President William Kozy said the flu season bounced back in Japan during the second quarter. It was the third most serious flu season in Japan in the last 10 years, Kozy said. Of all of BD's flu product revenue, more than 80% came from Japan.
The biosciences segment brought in $204 million, an increase of 8% thanks to instrument growth, increased sales in the Discovery Labware unit and improved operating efficiency.
In the pipeline are new blades from the ophthalmic unit, advanced drug-delivery technologies, prefilled syringes and upgrades for existing safety devices to reduce the incidence of hospital acquired infections.
The company issued earnings guidance for its fiscal third quarter ending June 30 of 73 to 75 cents a share and the raised its full-year guidance to between $2.93 and $2.97 from a range of $2.89 to $2.94.

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As exciting as hyper-growth companies can be, I happen to be more interested in taking profits from the market than in entertainment. Accordingly, investors should always be willing to at least consider "boring" companies like medical technology specialist Becton, Dickinson (NYSE: BDX - News) -- particularly if they can get such companies at cheap valuations.
Becton, Dickinson sells a variety of products ranging from reagent kits and cell sorters to blood culturing systems to needles, diabetes products, and infusion products. Granted, none of this stuff is terribly exciting, but the company has a long record of growth, from the low to high single digits, and the stock has done fairly well over time.
In the company's second quarter, revenue grew about 8.9% to $1.37 billion. The company saw a slight improvement in its margins and operating income climbed about 11% over the prior year.
While U.S. sales grew only 3%, hurt by a major distributor's decision to reduce inventory levels, overseas sales climbed about 14% (9% net of foreign-exchange benefit). Foreign sales were especially strong in diagnostics (Japan had a bad flu season), as well as in pharmaceutical systems sales like IV infusion systems and safety needles.
Domestically, Becton, Dickinson saw good growth in its immunocytometry business and in its diabetes care segment, where it sells a variety of lancets, syringes, and glucose monitoring supplies. What's more, the company also has a relationship with Medtronic (NYSE: MDT - News) in diabetes that has helped Becton, Dickinson already and could hold even greater promise down the road.
It's admittedly hard to drum up a lot of "rah-rah" enthusiasm for such a steady-eddie like Becton, Dickinson. The company's growth is consistent but somewhat slow; dividend payout is OK but not great; returns on capital are good but not eye-popping. What's more, valuation isn't all that high, but neither is it at a historical bargain level. Nevertheless, the stock has a good track record, and long-term investors probably aren't too bothered by the company's "boring" attributes.
It's possible to find dependable health-care companies that have more growth in the story -- names like Johnson & Johnson (NYSE: JNJ - News), Abbott Labs (NYSE: ABT - News), and perhaps Novartis (NYSE: NVS - News) or Baxter (NYSE: BAX - News). But Becton, Dickinson does have a long history of stable growth and a reputation for not being particularly volatile.
I favor names with a little more sizzle, but investors looking for a stable and dependable company with broad exposure to the medical industry should take a look for themselves at Becton, Dickinson.