Becton Dickinson 'Capable Of Sustaining A Breakout', Analyst Upgrades Stock With 20% Upside Potential

KeyBanc has upgraded Becton, Dickinson, and Company BDX with a price target of $304.
The analyst writes that BDX is progressing toward increasing the overall WAMGR of its portfolio through increased new product introductions, bolt-on M&A, and portfolio rationalization.
It has benefited from the excess revenue of its COVID-19 test, which it reinvested toward growth initiatives through FY22.
The new launches are weighed toward high-growth end markets, and BDX estimates sales from FY21-FY25 new products could double to $1.7 billion in FY25 vs. $0.8 billion in FY21.
The analyst does not expect transformative deals. Management is focused on scaled strategic bolt-ons of $1 billion- $3 billion. Its M&A strategy has been an upside driver of recent growth trends and has a decent pipeline of potential targets.
Finally, while timing is uncertain, Alaris's full reintroduction to market is a likely upside catalyst and incremental to its current growth profile over several years, the analyst writes.
BDX remains on track to achieve its operating margin target of 25% by FY25.
Its FY23 guidance implies a sizable sequential margin ramp with a 2H exit rate already close to its FY25 target, and if achieved, it could reinforce improving investor sentiment.
For FY23, the company raised its revenue guidance to $19.1 billion-$19.3 billion compared to $18.6 billion-$18.8 billion previously announced. It is an adjusted EPS of $12.07-$12.32 compared to $11.85-$12.10 previously expected.
Price Action: BDX shares are up 0.36% at $253.90 on the last check Wednesday.

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