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On Friday, Piper Sandler adjusted its stance on Becton Dickinson (NYSE:BDX) shares, downgrading the company from Overweight to Neutral and slashing the price target to $185.00 from the previous $260.00. The stock, currently trading at $169.54, has fallen 17.3% in the past week, touching near its 52-week low. The decision comes as the firm’s analysts express diminishing confidence in the company’s execution and management’s demand forecasting capabilities. According to InvestingPro analysis, the stock appears undervalued at current levels, with multiple indicators suggesting oversold conditions.
The downgrade was prompted by Becton Dickinson’s performance in the second fiscal quarter, where organic revenue growth was less than 1%. This stands in contrast to the company’s overall revenue growth of 5.89% over the last twelve months, as reported by InvestingPro. According to the analysts, nearly every segment of the company’s revenue missed their growth expectations on an organic basis. The analysts acknowledged that certain growth pressures, such as cuts in Life Sciences and research funding or the China Volume-Based Procurement (VBP) program, could explain some of the underperformance. However, they expressed concern over the company’s ability to provide conservative and achievable guidance. Despite these challenges, the company maintains its position as a dividend aristocrat, having raised dividends for 54 consecutive years.
Piper Sandler’s analysts noted their frustration, admitting that while they believe positive changes may be on the horizon following Becton Dickinson’s planned Life Sciences separation, they cannot in good conscience recommend investing new money in the stock at its current valuation levels. The firm anticipates that some may push back on the timing of the downgrade, suggesting it could be occurring at a low point for the company’s stock.
The downgrade reflects a significant shift in sentiment from Piper Sandler, implying a cautious outlook for Becton Dickinson’s near-term growth prospects. The analysts’ statement highlights a lack of confidence in the company’s short-term ability to meet performance expectations, leading to the revised investment rating and price target.
In other recent news, Becton Dickinson and Company reported its second-quarter fiscal year 2025 earnings, revealing a mixed financial performance. The company achieved an adjusted earnings per share (EPS) of $3.35, surpassing analysts’ forecasts of $3.28. However, revenue fell short of expectations, reaching $5.27 billion against the anticipated $5.35 billion. This revenue shortfall was attributed to challenges in the Chinese market and reductions in research spending, particularly impacting the Life Sciences and Interventional segments. In light of these results, Becton Dickinson has revised its full-year organic growth guidance downward, from an initial range of 4.0%-4.5% to a new range of 3.0%-3.5%.
Analyst firms have responded to these developments with mixed reactions. Goldman Sachs downgraded Becton Dickinson’s stock rating from "Buy" to "Neutral" and lowered its price target from $256.00 to $192.00, citing a recalibration of organic growth estimates. Similarly, BofA Securities downgraded the stock from "Buy" to "Neutral" and reduced the price target from $269.00 to $190.00, expressing concerns over inconsistent execution. In contrast, Stifel maintained a "Buy" rating, albeit with a reduced price target of $224.00 from $280.00, acknowledging the company’s EPS beat despite the revenue miss. Becton Dickinson anticipates that new product launches and commercial investments will support its performance in the second half of the fiscal year.
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