Becton, Dickinson and Company (BDX) recently announced a quarterly dividend of 41 cents per share, a hike of 4 cents, or 10.8%, from the prior quarter. This dividend will be paid by the company, on December 31, 2010, to shareholders of record as of December 10, 2010. At the current rate, the annualized dividend for fiscal 2011 will be $1.64 per share. With this announcement, Becton Dickinson marked the 38th consecutive year with a hike in dividend.
Becton Dickinson is a major worldwide medical technology company that produces and markets medical devices, instrument systems and reagents. The company is dedicated to enhancing drug delivery, improving the pace of diagnosing infectious diseases and cancer and advancing R&D for new drugs. It competes with companies such as Baxter International (BAX).
The pros and cons of investing in the company are balanced. We are pleased with the overall guidance for fiscal 2011. Becton Dickinson forecasts revenues to grow 4% year over year in fiscal 2011. The company projects reported earnings per share from continuing operations to grow about 11% to 13% to a range of $5.45 to $5.55. It expects adjusted earnings per share from continuing operations to grow in a band of 10% to 12% for fiscal 2011.
However, our optimism is tempered by the fact that Becton Dickinson lacks any major short-term catalyst. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth, which is not expected to continue, having already penetrated the U.S. market. On the other hand, among the sub-segments, Diabetes Care (up 9.1% in constant currency) and Cell Analysis (up 7.8% in constant currency) finished strongly in fiscal 2010.
We are also hopeful to see some growth in the future with the European Union’s adoption of safety requirements, recovery in research markets and continued growth in flow cytometry in the clinical setting. Becton Dickinson’spreeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field.
The company’s cash flows remain strong and management is committed to efficiently deploying cash flow for increasing returns to shareholders through its share repurchase program.We currently have a long-term ‘Neutral ‘recommendation on the stock, which is supported by a short-term Zacks #3 Rank (Hold).
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