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On Thursday, Becton Dickinson (NYSE:BDX), a prominent healthcare equipment company with a $50.12 billion market capitalization, faced a downgrade in its stock rating from Buy to Neutral by analysts at BofA Securities, accompanied by a significant reduction in the price target from $269.00 to $190.00. According to InvestingPro analysis, the stock is currently trading near its 52-week low, suggesting potential value for long-term investors. BofA Securities cited the company’s failure to meet its original FQ2 organic growth guidance of 2.75%, only achieving 0.9%, as a key reason for the downgrade. Additionally, Becton Dickinson lowered its full-year organic growth forecast to 3-3.5% from the previously anticipated 4-4.5%. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with a 5.89% revenue growth and an impressive 54-year track record of consecutive dividend increases.
The analysts expressed concerns over Becton Dickinson’s continued inconsistent execution, which has been an issue for several years. The expectation that this year would showcase a turnaround, supported by more conservative guidance, did not materialize. The analysts stated, "However, execution still hasn’t improved and thus we can no longer defend BDX as a stock that’s too cheap and we can no longer defend BDX as a defensive stock."
BofA Securities also noted that approximately 75% of the reduction in guidance was attributed to the Life Sciences segment. Despite this, Becton Dickinson has affirmed that its planned business separation remains on schedule. The analysts remarked on the difficulty in assigning additional value based on the sum of the parts when the company’s performance is lagging.
The report concluded with the analysts’ position that they will reassess the value of the RemainCo growth, which refers to the remaining company post-separation, once Becton Dickinson demonstrates improved execution and when there is greater certainty regarding the completion of the separation. With a beta of 0.38, the stock historically shows low volatility, and InvestingPro analysis indicates the stock is currently undervalued. Investors can access detailed valuation metrics, 10+ additional ProTips, and comprehensive analysis through InvestingPro’s in-depth research report.
In other recent news, Becton Dickinson reported its Q2 2025 earnings, showcasing a mixed financial performance. The company exceeded expectations with an adjusted earnings per share (EPS) of $3.35, compared to the forecast of $3.28. However, revenue fell short, reaching $5.27 billion against the anticipated $5.35 billion. Despite the revenue miss, the company highlighted ongoing investments in U.S. manufacturing and new product launches. Becton Dickinson also faces challenges, such as procurement pressures in China and research funding cuts affecting certain segments. The company maintains a positive outlook, projecting full-year revenue between $21.8 billion and $21.9 billion, with adjusted EPS guidance of $14.34 to $14.6. Analysts from Wells Fargo (NYSE:WFC) and JPMorgan noted the company’s strategic initiatives and efforts to navigate macroeconomic challenges. The firm emphasized its commitment to driving future growth through innovation and operational efficiency.
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