BDX: A Quality Company, And Priced Like It

It has been a lousy year for healthcare stocks, though marginally less lousy for Becton, Dickinson (NYSE:BDX). Investors seem to have belatedly learned to appreciate this well-diversified player in devices, diagnostics and biosciences, and the stock has done quite well relative to similarly diversified companies like Abbott Labs (NYSE:ABT), Roche (Nasdaq:RHHBY) and Baxter (NYSE:BAX). Now the question is whether there is enough growth to validate the price. 


The Quarter That Was
Nobody has been expecting great performance from large healthcare companies like BDX, so the mediocre results from the third quarter are not all that disappointing. Overall sales were up 1% as reported, and up nearly 3% on a constant currency basis. Drilling down, the medical business was flat (diabetes was strong, pharma systems was weak, and medical/surgical was snoozing), while diagnostics and biosciences were both up by single-digits.

Again, there are no real surprises here. Patient visits and procedure volumes are down across the board - not only because the recession has led to a lower utilization of healthcare, but also because the flu outbreak in 2009 made for tough comps. The performance in biosciences is not very encouraging, but also not at a level that really raises a red flag at this point.

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