Becton Dickinson Has More Room To Grow; Argus Reiterates Buy Rating

Argus Research issued a company note on Becton Dickinson and Co (NYSE: BDX) following the visible benefits of the acquisition of CareFusion, which has helped drive better than expected revenue growth and improved profitability. Argus reiterated Becton Dickinson's Buy rating and $167 price target.

David Toung, an analyst at Argus, wrote, "Becton Dickinson expects cost synergies from the CareFusion acquisition to drive margin expansion and earnings growth in FY16-FY18. In addition, CareFusion adds a portfolio of medical products, including smart infusion pumps and automated medication dispensing cabinets. CareFusion has also had relatively low penetration in overseas markets, and has thus given BDX's sizable global marketing organization an opportunity to expand the reach of its products outside the U.S [...] Going forward, we expect new products to contribute to revenue and EPS growth. We also expect EPS to benefit from margin expansion."

CareFusion Acquisition

One of the most tangible benefits of the CareFusion acquisition is that Becton Dickinson's product portfolio has been expanded with the ability to sell "smart" infusion pumps and medication dispensing systems.

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As these are highly demanded products, Argus believes that CareFusion synergies will continue to be growth drivers for the combined company going forward.

However, Becton Dickinson is facing a combination of regulatory and pricing pressures heading into 2016. The biggest risk is that over half of the company's revenues will come from overseas markets, which tend to be more volatile than the American markets. In response to this uncertainty in revenue, the biotechnology company is lowering manufacturing and sourcing costs while also adding additional product features that can command higher prices in the global marketplace.

Becton Dickinson was recently seen trading slightly down at $145.15.

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