Becton Dickinson Has A Strong, Diverse Pipeline, But Is Fairly Valued, Says BMO

With a presence across 10 markets, leadership in some segments and a "robust" product pipeline, Becton Dickinson and Co BDX is "more than just needles and syringes," according to BMO Capital Markets. 

The Analyst

BMO analyst Joanne Wuensch initiated coverage of Becton Dickinson with a Market Perform rating and $249 price target, presenting roughly 15-percent upside from current levels.

The Thesis

Following the acquisition of C R Bard Inc BCR, Becton Dickinson offers differentiated technology and breadth — prerequisites for the survival of medical technology companies, Wuensch said in a Monday note.

The next-gen Alaris infusion pump, Lutonix for BTK labeling and Onclarity for HPV testing, which received FDA approval in February, are testaments to Becton Dickinson's product pipeline across all franchises, the analyst said. 

Through the C.R. Bard acquisition, Wuensch sees enhancement in the company's infection prevention and medication management portfolio and exposure to vascular, urology and oncology products. The company is targeting cost synergies of $300 million by 2020, Wuensch said. 

BMO expects Becton Dickinson to generate mid-single-digit revenue, double-digit earnings per share growth and strong free cash flow.

For 2018, BMO projects revenue of $15.82 billion and earnings per share of $10.95.

Becton Dickinson's valuation reflects BMO's thinking that the shares of the company should be valued similarly to other diversified companies, Wuensch said, adding that the firm will wait for a better entry point. 

The Price Action

Becton Dickinson shares are up about 18 percent over the past year.

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