Medical technologies and devices major, CR Bard Inc. (BCR) raised its quarterly dividend by 5% to 20 cents per share. The increased dividend will be paid on August 3, 2012 to shareholders of record as of July 23, 2012.
The board of directors of the company also announced a share repurchase program to buy back up to $500 million of shares through open market purchases or private negotiations.
C.R. Bard’s commitment towards hiking shareholders’ return as well as announcing a share repurchase program reflects its stable cash position and healthy cash flow. It ended the first quarter of 2012 with strong cash and short-term investments of $804.4 million, recording an 8.2% sequential rise.
For fiscal 2012, the company expects cash flow from operations to be around $500 million. Capital expenditure is projected in the range of $65 million to $75 million.
C.R. Bard has repurchased roughly 1.2 million shares in the first quarter of 2012 and is still left with roughly 88 million shares to repurchase under the June 2010 share repurchase program.
We believe that the share buyback program and the dividend hike together are the best strategic moves by the company to attract investors. This strategy also positions Bard in a positive light amidst tough macroeconomic conditions.
C.R. Bard’s well-diversified end markets and vast product portfolio insulate it from fluctuations in any single therapeutic category. We expect new product launches to drive organic revenue growth and help C.R. Bard to meet its sales objective.
However, increasing competition and pricing/volume pressure remain areas of concern. C.R. Bard faces strong competition from Boston Scientific (BSX), Johnson & Johnson (JNJ) and Angiodynamics (ANGO). We currently have a Neutral rating on C.R. Bard. The stock currently retains a Zacks #3 Rank, which translates into a short-term “Hold” recommendation.
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