BD Stock Falls in Pre-Market Despite Q2 Earnings Beat, Margins Down

Becton, Dickinson and Company BDX, popularly known as BD, delivered adjusted earnings per share (EPS) of $3.35 in the second quarter of fiscal 2025, up 5.7% year over year. The figure topped the Zacks Consensus Estimate by 2.1%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)The adjustments include expenses related to purchase accounting adjustments and restructuring costs, among others.GAAP EPS for the quarter was $1.07, reflecting a decline of 42.2% from the year-ago figure.BDX’s Revenues in DetailBD registered revenues of $5.27 billion in the fiscal second quarter, up 4.5% year over year on a reported basis. The figure missed the Zacks Consensus Estimate by 1.7%.At constant exchange rate (CER), revenues climbed 6%, while organic revenue change was 0.9% year over year.Robust performance by the BD Medical segments drove the top-line improvement.Shares of this company lost nearly 5.4% in today’s pre-market trading.BD’s Segment DetailsBD’s operations consist of three worldwide business segments — BD Medical, BD Life Sciences and BD Interventional.In the quarter under review, BD Medical reported worldwide revenues of $2.76 billion, up 12.7% from the year-ago quarter on a reported basis, 14.3% at CER and 3.6% on an organic basis. Per management, the segment’s organic revenue growth reflected mid-single-digit growth in MMS and low-single-digit growth in Medication Delivery Solutions and Pharmaceutical Systems business units. This figure compares to our fiscal second-quarter revenue projection of $2.85 billion.Worldwide revenues in the BD Life Sciences segment totaled $1.25 billion, down 4.3% year over year on a reported basis and 2.4% both at CER and on an organic basis. The segment’s performance reflected declines in Diagnostic Solutions (DS) and Biosciences business units, partially offset by low-single-digit growth in the Specimen Management business unit. This figure compares to our fiscal second-quarter revenue projection of $1.29 billion.BD Interventional segment generated worldwide revenues of $1.26 billion, down 2.2% from the year-ago quarter on a reported basis and 1.1% both at CER and on an organic basis. The segment’s performance reflected low single-digit growth in Surgery (SURG), flat performance in Peripheral Intervention and a decline in Urology & Critical Care business units (which includes an outsized prior-year licensing comparison). This figure compares to our fiscal second-quarter revenue projection of $1.33 billion.BDX’s Geographic ResultsIn the second quarter of fiscal 2025, revenues in the United States improved 6.9% year over year to $3.11 billion. This figure compares to our fiscal second-quarter revenue projection of $3.16 billion.International revenues grossed $2.16 billion, up 1.2% from the year-ago quarter on a reported basis and up 4.8% at CER. This figure compares to our fiscal second-quarter revenue projection of $2.21 billion.Becton, Dickinson and Company Price, Consensus and EPS Surprise Becton, Dickinson and Company price-consensus-eps-surprise-chart | Becton, Dickinson and Company QuoteBD’s Margin AnalysisIn the quarter under review, BD’s gross profit decreased 2% year over year to $2.26 billion. The gross margin contracted 286 basis points (bps) to 42.8%. We had projected a gross margin of 46.2% in the second quarter of fiscal 2025.Selling and administrative expenses increased 6.7% year over year to $1.27 billion. Research and development expenses increased 1% year over year to $302 million. Adjusted operating expenses of $1.58 billion rose 5.6% year over year.Adjusted operating profit totaled $682 million, reflecting a 16% decline from the year-ago quarter. The adjusted operating margin in the fiscal second quarter contracted 316 bps to 12.9%.BDX’s Financial PositionBD exited second-quarter fiscal 2025 with cash and cash equivalents and short-term investments of $683 million compared with $728 million at the fiscal first-quarter end. Total debt (including current debt obligations) at the end of the fiscal second quarter was $19.27 billion compared with $18.76 billion at fiscal first quarter-end.Cumulative net cash provided by continuing operating activities at the end of second-quarter fiscal 2025 was $857 million compared with $1.37 billion a year ago.Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 5.28%.BD’s Fiscal 2025 GuidanceBD has revised its financial outlook for fiscal 2025 to reflect the estimated impact of the recently announced tariffs.BD now projects its full fiscal year revenues between $21.8 billion and $21.9 billion (up 8-8.5% on a reported basis from the comparable fiscal 2024 period), narrowed from the prior outlook of $21.7 billion and $21.9 billion (up 7.9-8.4% on a reported basis from the comparable fiscal 2024 period). The Zacks Consensus Estimate is pegged at $21.86 billion.For fiscal 2025, adjusted revenues at CER are now expected to reflect growth in the range of 7.8-8.3% from the comparable fiscal 2024 period, lowered from the prior outlook of growth of 8.8-9.3% from the comparable fiscal 2024 period.Organic revenue growth is now expected between 3% and 3.5% from the comparable fiscal 2024 period, lowered from the earlier outlook of growth of 4% and 4.5% from the comparable fiscal 2024 period.For the full fiscal year, adjusted EPS is now anticipated to be in the range of $14.06-$14.34 (representing growth of 7-9.1% from the comparable fiscal 2024 period), lowered from the previous outlook of $14.30-$14.60 (representing growth of 8.8-11% from the comparable fiscal 2024 period). The Zacks Consensus Estimate is pegged at $14.42    .Our TakeBD exited the second quarter of fiscal 2025 with better-than-expected earnings and solid top-line results. Robust performances by its Medical segment and both geographic regions were encouraging. Strength in BD’s segments' business units during the reported quarter was also promising. Per management, BD Excellence operating system is driving continued margin expansion and increasing investment in its commercial organization and innovation. This looks promising for the stock.Apart from these, there were a few other developments during the recent period, like the BD Medical segment’s Advanced Patient Monitoring business unit launching its next-generation hemodynamic monitoring solution, HemoSphere Alta Advanced Monitoring Platform. The BD Interventional segment’s SURG business unit announced the FDA 510(k) clearance and the launch of its Phasix ST Umbilical Hernia Patch, while the BD Life Sciences segment’s DS business unit announced the FDA 510(k) clearance for its advanced microbiology solution which integrates the BD Phoenix Automated Microbiology System, BDXpert System and BD Synapsys Informatics Solution to support accurate detection of antimicrobial resistance.However, BD’s lower-than-expected revenues in the second quarter of fiscal 2025 and lower revenues from its Life Sciences and Interventional segments were disappointing. The contraction of both margins does not bode well. The anticipated impact of tariffs on BD’s fiscal 2025 performance raises apprehension.BDX’s Zacks Rank and Key PicksBD currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader medical space that have announced quarterly results are Encompass Health Corporation EHC, Integer Holdings Corporation ITGR and Boston Scientific Corporation BSX.Encompass Health, carrying a Zacks Rank #2 (Buy), reported first-quarter 2025 adjusted EPS of $1.37, beating the Zacks Consensus Estimate by 15.1%. Revenues of $1.46 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Encompass Health has a long-term estimated growth rate of 9.8%. EHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.3%.Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.Boston Scientific reported first-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 11.9%. Revenues of $4.66 billion surpassed the Zacks Consensus Estimate by 2.3%. It currently carries a Zacks Rank #2.Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. 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Click to get this free report Boston Scientific Corporation (BSX): Free Stock Analysis Report Becton, Dickinson and Company (BDX): Free Stock Analysis Report Integer Holdings Corporation (ITGR): Free Stock Analysis Report Encompass Health Corporation (EHC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks