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On Tuesday, Piper Sandler's analysts increased the price target for Becton Dickinson (NYSE:BDX) shares to $280 from $275, while maintaining an Overweight rating. The adjustment follows a period of underperformance for Becton Dickinson stock, which has lagged behind the iShares U.S. Medical (TASE:PMCN) Devices ETF (IHI) and the S&P 500 by 75% and 120%, respectively, over the past six-plus years.
Despite the company's challenges in the market, Becton Dickinson has succeeded in executing on margin commitments and delivering better-than-expected results in the first year of returning its Alaris product to the market. With a robust gross profit margin of 45.41% and a market capitalization of $72.12 billion, the company maintains a strong financial position, earning a GOOD overall health score from InvestingPro. The persistent underperformance has led to increased investor calls for the company to explore strategic alternatives to unlock value. Among the options being discussed is a possible spin-off of the Life Sciences division.
Piper Sandler's analysts have expressed support for such a move, suggesting that a spin-off could provide multiple benefits to shareholders while introducing only minor dis-synergies that are typical in any separation process. They estimate that the total value for shareholders could be approximately 10-30% higher than Becton Dickinson's current share price.
The timing of a potential strategic announcement remains uncertain, but Piper Sandler believes it could be aligned with the company's Investor Day in late February. If a declaration is made, it would allow management to focus the Investor Day presentation on the strategic and financial opportunities available to the remaining company.
In other recent news, Becton Dickinson (BD), a global medical technology firm, has reported robust financial growth in its Fourth Quarter and Full-Year Fiscal 2024 Earnings Call. The company declared a Q4 revenue growth of 7.4% and a full-year organic revenue increase of 5%. Adjusted diluted earnings per share (EPS) rose by 11.4%, reaching $13.14 for the year. Despite challenges in China and the Bioscience-Pharma sector, BD's MedTech and Diagnostics segments grew by 5.9%, with BD Medical's biologic drug delivery sales surpassing $1 billion.
BD's future outlook includes a revenue anticipation between $21.9 billion and $22.1 billion for FY '25, and adjusted diluted EPS guidance of $14.25 to $14.60. The company also announced a $1 billion share repurchase plan and increased its dividend by 9.5%. Despite a cautious stance on the Chinese market, BD expects high single-digit revenue growth for FY '25 and a 100 basis point increase in operating margins.
Innovations in biologics and diagnostics, along with the integration of the Advanced Patient Monitoring business, are expected to propel growth. However, the company anticipates Q1 performance to be below the overall guidance due to tough year-over-year comparisons. These are the recent developments in the company.
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