In a market that has offered up plenty of values in med-tech, investors may do well to draw lines between quality and value. There is no question that Becton Dickinson (BDX) is a very good (and very stable) company with substantial market share in a host of profitable sectors. The problem, though, is that there is no shortage of love for this name and no pressing need to buy the stock at current prices.
First Quarter Results Point To One Big Challenge
Perhaps the biggest issue for BD today is producing the sort of growth that it takes to get institutional investors excited and eager to push up the valuation. Reported growth in the fiscal first quarter was just 2.5%, which was at the high end of expectations, but not all that scintillating.
Growth was relatively well-balanced. The smallest division, Biosciences, was also the weakest, as growth was just about 1%. Medical and Diagnostics were relatively stronger, both growing about 3%. Encouragingly, two of the company's strongest business from a platform standpoint, diabetes and diagnostics, were also the strongest from a top-line perspective (growing 6% and 5%, respectively). At the same time, the 2% Med Surg growth was not so bad relative to low procedure counts and the numbers reported from the comparable units at Covidien (COV) and CareFusion (CFN).
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Becton Dickinson Too Beloved For Now
2 comments:
Like the article, but you state BD has a hefty valuation, how are you figuring this when it looks like the current and next year p/e is lower than other competitors in the field. Another question is who are you referring to when you say "two many healthcare businesses with compelling franchises and 20% or greater undervaluation". Thanks
P/E is irrelevant to me.
I use cash flow, EV/EBITDA and very rarely EV/Rev or P/Bk.
Thank you for pointing out the typo.
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