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BD (BDX) Gears Up for Q3 Earnings: What's in the Offing?

Becton Dickinson and Company BDX, popularly known as BD, is scheduled to report third-quarter fiscal 2022 results on Aug 4, before market open.

In the last-reported quarter, the company’s earnings of $3.18 per share surpassed the Zacks Consensus Estimate by 6.7%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 12.9%, on average.

Let’s see how things have shaped up for BDX prior to this announcement:

Factors to Note

BD Life Sciences

During the fiscal 2022 second-quarter earnings call in May, BD confirmed that it had witnessed lower COVID-only testing revenues, which led to a decline in the company’s Life Sciences segment. However, excluding COVID-only testing, Life Sciences segment’s Integrated Diagnostic Solutions (IDS) recorded a solid uptick in the base business. This uptick was driven by demand for combination flu/COVID-19 diagnostic tests and continued demand for specimen management products. This trend is expected to have continued in the fiscal second quarter as well, thereby driving BD’s base business growth of IDS.

Further, continued robust demand for research solutions owing to recovery in lab activity and sustained COVID-19 research is likely to be another revenue driver for BD’s Biosciences business of the broader Life Sciences arm.

BD’s e-commerce site has also been receiving encouraging acceptance. The company expects this to have continued in the to-be-reported quarter, thereby contributing to revenues.

In May, BD announced the U.S. launch of its new, fully automated, high-throughput infectious disease molecular diagnostics platform, BD COR MX instrument, a new analytic instrument option for the BD COR System. This is likely to have boosted its fiscal third-quarter revenues. Other likely top contributors to the topline include BD Veritor At-Home COVID-19 Test and BD MAX IVD assays.

In May, BD announced the expansion of its strategic partnership with Babson Diagnostics to move blood sample collection into new care settings, including enabling patients to collect blood samples at home for diagnostic testing. In June, the company announced a partnership with CerTest Biotec and in July, BD announced their newly developed molecular polymerase chain reaction test for the monkeypox virus is now commercially available outside of the United States for use in research applications by laboratories.

In June, the company announced its plans to unveil a new cell sorting technology — BD FACSDiscover S8 Cell Sorter. The same month, BD announced the receipt of the CE Mark for the BD MAX Respiratory Viral Panel — the new molecular diagnostic combination test for SARS-CoV-2, Influenza A + B and Respiratory Syncytial Virus from the company. These developments buoy our optimism regarding the stock.

However, the decline in COVID-only testing revenues is likely to weigh on BD’s Life Sciences segment.

BD Interventional

Sustained recovery in elective procedures and strength in surgery reflecting growth across the hernia, biosurgery and infection prevention platforms (as deferrable procedures rebound) are also likely to have contributed to segmental revenues in the fiscal third quarter despite some impacts from planned product line discontinuations in Peripheral Intervention and Urology & Critical Care business units of lower margin and non-strategic products as part of BD’s portfolio simplification strategy. The buyouts of Tepha and Tissuemed, Ltd. are also likely to have pushed up the revenues.

Other likely top-line drivers from this segment include the continued market adoption of Sterile BD ChloraPrep and Rotarex Atherectomy System.

The Zacks Consensus Estimate for fiscal third-quarter BD Interventional revenues is pegged at $1.14 billion, suggesting an improvement of 4.9% from the year-ago quarter’s reported figure.

Other Factors to Note

BD is likely to have witnessed continued momentum in its Medical segment, attributable to strong demand for the company’s durable core products, particularly in the United States, driven by competitive gains in catheters and vascular care devices.

However, difficult prior-year comparison for BD’s business segments and continued impacts on the medical industry with continued developments of new variants and waves of COVID emerge are likely to weigh on the company’s fiscal third-quarter revenues, thereby raising our apprehension.

The Estimate Picture

For third-quarter fiscal 2022, the Zacks Consensus Estimate of $4.46 billion for total revenues implies a decline of 8.8% from the prior-year quarter’s reported figure.

The consensus estimate for earnings per share is pegged at $2.49, indicating a decline of 9.1% from the prior-year period’s reported number.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: BD has an Earnings ESP of -1.52%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle:

Centessa Pharmaceuticals plc CNTA has an Earnings ESP of +2.70% and a Zacks Rank of 2. CNTA has an estimated growth rate of 20.6% for 2023.

Centessa Pharmaceuticals’ earnings surpassed estimates in two of the trailing four quarters and lagged the same in the other two, with the average being 6.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adaptive Biotechnologies Corporation ADPT has an Earnings ESP of +3.47% and is a Zacks #2 Rank stock. ADPT has an estimated long-term growth rate of 10.3%.

Adaptive Biotechnologies’ earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, with the average surprise being 5.8%.

Sight Sciences, Inc. SGHT has an Earnings ESP of +14.29% and is a Zacks #2 Ranked stock. SGHT has an estimated growth rate of 23.7% for 2022.

Sight Sciences’ projected EPS growth currently stands at 23.6%, compared with the industry’s 5.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Becton, Dickinson and Company (BDX): Free Stock Analysis Report
 
Adaptive Biotechnologies Corporation (ADPT): Free Stock Analysis Report
 
Centessa Pharmaceuticals PLC Sponsored ADR (CNTA): Free Stock Analysis Report
 
Sight Sciences, Inc. (SGHT): Free Stock Analysis Report
 
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