Becton, Dickinson and Company (BDX) recently reported that it had taken over the Sirigen Group Limited. Sirigen produces polymeric dyes which find several applications, including flow cytometry. Its know-how is expected to lead to the innovation of newer dyes, which may be far brighter than orthodox dyes.
Becton Dickinson believes that the acquired technology complements its own core competence. It expects the take over to lead to fresh offerings over the next couple of years or so.
The two parties did not disclose the terms of the deal. Becton Dickinson continues to maintain guidance for earnings per share for fiscal 2012 (as stated in its press release for the third quarter). The deal is expected to dilute reported earnings per share by about a penny for fiscal 2012.
We remain cautious about Becton Dickinson due to the lack of major short-term catalysts. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth, which is not expected to continue, given that the U.S. market is already largely penetrated.
On the positive side, Becton Dickinson’s preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field.
Becton Dickinson faces a wide range of competitors, including Baxter International (BAX) in certain niches, in each of its three business segments. We currently have a long-term Neutral recommendation on the stock. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.
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