Becton, Dickinson and Company (BDX - Analyst Report) reported fourth-quarter fiscal 2014 earnings of $1.68 per share, which beat the Zacks Consensus Estimate by 3 cents. Earnings per share (EPS) increased 9% from the year-ago quarter on the back of higher revenue growth and stringent cost control.

Becton, Dickinson and Company - Earnings Surprise | FindTheBest

Quarter Details

Revenues increased almost 5% to $2.20 billion, better than the Zacks Consensus Estimate of $2.16 billion. The year-over-year growth was driven by higher Medical and Diagnostics revenues.

Medical revenues climbed 6.5% year over year to $1.19 billion, driven by 5% growth in Medical Surgery, 8.2% in Diabetes Cure and 7.9% in Pharmaceutical business.

Diagnostics revenues increased 4.1% from the year-ago quarter to $708 million, driven by 4.7% growth in Preanalytical Systems and 3.6% growth in Diagnostic Systems.

Biosciences revenues remained almost flat on a year-over-year basis to $301 million.

Total safety revenues increased 5.7% year over year to $566 million. US sales decreased 0.8%, while international revenues jumped 14.1% from the year-ago quarter.

Becton, Dickinson continued launching products during the quarter. New products as percentage of revenues were 15% at the end of the quarter.

Geographically, US revenues increased 2.3% to $871 million, while International revenues were up 6.2% at constant currency to $1.33 billion. Revenues from China grew 21.4% from the year-ago quarter. Revenues from emerging markets, which grew in double digits during the quarter, were 26.4% of total revenue.

Gross margin contracted 90 basis points (bps) from the year-ago quarter to 51%.

Costs and expenses as percentage of revenues contracted 100 bps to 30.7%. This was primarily due to 90 bps decline in selling, general & administrative (SG&A) expense and 30 bps decline in research & development (R&D) expense compared to the year-ago quarter.

Operating income increased 5.8% from the year-ago quarter to $448 million.

Guidance

For fiscal 2015, at constant currency Becton, Dickinson expects revenues to increase in the range of 4.5% to 5%. Adjusted EPS is expected to be in the range of $6.76 to $6.83 for the fiscal year.

Our Take

Becton, Dickinson reported better than expected fourth quarter results. The company maintained its focus on expansion in overseas markets, in particular, the emerging markets. Higher international safety-engineered product sales also drove results.

However, Becton, Dickinson continues to be challenged by downward pressure on demand for health care products. Hospital and lab-testing expenditure remain as areas of concern.

Zacks Rank

Currently, Becton, Dickinson has a Zacks Rank #3 (Hold). Some better-ranked stocks include AngioDynamics Inc. (ANGO - Analyst Report), Fluidigm Corp. (FLDM- Snapshot Report) and BioTelemetry, Inc. (BEAT - Snapshot Report). All of them carry a Zacks Rank #1 (Strong Buy).

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