Becton, Dickinson's (BCR) C.R. Bard Buyout Plans Bode Well

On Sep 11, we issued an updated research report on Franklin Lakes, NJ-based Becton, Dickinson and Company (NYSE:BDX) . The company is a medical technology firm engaged principally in the development, manufacture and sale of medical devices, instrument systems and reagents.

Shares of Becton, Dickinson have gained 23.2% year to date compared with the industry’s growth of 19.4%. The Zacks Consensus Estimate for current-year earnings have remained stable at $9.46 over the last 30 days. The stock carries a Zacks Rank #3 (Hold).

The market is upbeat about the company’s strategic acquisitions and collaborations. Becton, Dickinson signed an agreement to acquire C.R. Bard Inc. (NYSE:BCR) in March. Per management, the company is poised to become one of the biggest medical technology devices company in the world following the buyout. The cash-plus-stock acquisition is valued at $24 billion. After the completion of the deal in the fourth quarter of fiscal 2017, the company plans to create a third business segment, BD Interventional. Notably, C.R. Bard will be integrated into this vertical.

Coming to the strategic advantages post the closure of the deal, Becton, Dickinson will generate high-single digit growth in adjusted earnings per share by fiscal 2019. The transaction will lead to a pre-tax annual savings worth $300 million in fiscal 2020. The company will be able to expand to new areas where C.R. Bard currently operates. These include fast-growing vascular access segments like PICCs (peripherally inserted central catheters), midlines and drug delivery ports.

In this regard, we note that Becton, Dickinson announced collaboration for its IMPRESS instrument management system with cloud-based solution provider, UniteOR's surgical tray tracking and vendor management solution. The system provides greater visibility of surgical tray management to health-care workers in the operating room and sterile processing department. This integration with UniteOR allows Becton, Dickinson to offer a truly integrated approach for complex challenges which hospitals and health systems face with regard to surgical tracking.

Also, the company completed the buyout of Israeli-based Caesarea Medical Electronics, a global infusion pump systems manufacturer.

Apart from the acquisitions and mergers, other catalysts include the company’s receipt of 510(k) clearance from the FDA for a flow cytometer system with a leucocount reagent assay, which is used in residual white blood cell enumeration.

Becton, Dickinson also announced the global distribution of a complete line of products for mass spectrometry that provides high-speed and high-confidence identification of pathogens in clinical laboratories. This is a critical step in the fight against antimicrobial resistance. The company’s mass spectrometry solutions suite includes MBT Biotargets and MBT Sepsityper as well as standard reagents and other products.

Further, Becton, Dickinson’s focus on geographical expansion in overseas markets like India, China, Brazil and Turkey is boosting market sentiments.

Key Picks

Edwards Lifesciences Corporation (NYSE:EW) and Lantheus Holdings, Inc. (NASDAQ:LNTH) are two better-ranked medical stocks. Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 20.9% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 17.4% over the last six months.

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