Balanced Risk-Reward for CR Bard - Analyst Blog

On Mar 19, we have updated our research report on CR Bard, Inc. BCR.  BCR's emerging markets continued to be a strong source of revenue generation. However, we remain concerned about the stringent sales environment in the U.S.

BCR's adjusted earnings per share of $1.42 beat the Zacks Consensus Estimate by 3 cents, despite being lower than the year-ago level. On the back of better-than-anticipated fourth-quarter results, the company raised its earnings guidance for the full-year 2014. The company expects adjusted earnings per share between $8.20 and $8.30, up 42 to 44% from 2013.

Revenues in the quarter increased 4% (both on reported and constant exchange rate) to $791.3 million and comfortably outpaced the Zacks Consensus Estimate of $779.0 million.

On a geographic basis, revenues in the U.S. grew 4% to $517.7 million, while revenues outside the U.S. rose 3% to $273.6 million. Revenues from the emerging markets represented about 8.5% of BCR's total revenue in the fourth quarter.

For 2014, BCR expects revenues to grow between 6% and 8% at CER, assuming revenues of $130 million–$140 million from Gore royalties. The company expects to record a modest level of sales due to its multiyear transition supply agreement with Boston Scientific Corp. BSX, until the latter integrates manufacturing into their facilities.

BCR's strategy to introduce its products in the emerging markets is delivering accretive returns, as the company continues with its sturdy performance in the international markets. BCR is heavily investing in certain countries in Europe, Asia and Latin America. Moreover, Japan is also considered to be a major growth driver for the company.

However, BCR is exposed to competition from large manufacturers with multiple business lines, to smaller manufacturers, which offer a limited selection of products, and to a limited extent, reprocessors of single-use medical devices.

Currently, BCR retains a Zacks Rank #2 (Buy).

Other Stocks to Pick

Other players in the medical instruments sector that currently worth a look include Cardinal Health, Inc. CAH and The Cooper Companies Inc. COO. Both of them also carry a Zacks Rank #2 (Buy).