Leading medical devices maker C.R. Bard (BCR) has raised its quarterly dividend by a penny to 19 cents per share, representing a roughly 6% growth. This lifts the annual dividend to 76 cents per share from the current payout of 72 cents.
The revised quarterly dividend is payable on August 5, 2011, to shareholders of record as on July 25, 2011. The company’s previous dividend increase was in June 2010, when it raised the quarterly payout by 6% to 18 cents.
C.R. Bard remains successful in maintaining a positive earnings surprise streak. The company’s first-quarter 2011 earnings beat the Zacks Consensus Estimate by a nickel on the heels of healthy contributions from its core vascular business.
C.R. Bard’s well-diversified end-markets and vast product portfolio insulate it from fluctuations in any single therapeutic category. The company’s resource depth and focused innovation are its major competitive advantages. Moreover, C.R. Bard possesses a strong pipeline with several new product launches expected to support growth moving forward. The company is also making prudent use of cash in the form of acquisitions and share repurchases.
However, we remain cautious considering heightened competition (especially in soft tissue repair), pricing pressure and the company’s aggressive acquisition strategy.
C.R. Bard faces a mix of competitors ranging from large manufacturers with multiple business lines like Boston Scientific (BSX) and Johnson & Johnson (JNJ) to smaller manufacturers that offer a limited selection of products like Angiodynamics (ANGO).
Moreover, the pricing environment has been soft for most of the devices offered by the company. Also, higher R&D spending may be a drag on earnings and limit operating leverage going forward. Currently, we have a Neutral recommendation on the stock.
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