We expect Becton, Dickinson and Company BDX, popularly known as BD, to beat the Zacks Consensus Estimate when it reports first-quarter fiscal 2016 results on Feb 3.
Why a Likely Positive Surprise?
Our proven model shows that BD is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: BD’s Earnings ESP stands at +1.09%. This is because the company’s Most Accurate estimate stands at $1.86, whereas the Zacks Consensus Estimate is pegged at $1.84. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: BD currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of BD’s Zacks Rank #3 and +1.09% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
We note that the CareFusion takeover has opened up significant opportunities for BD. The combined company has delivered strong top-line results over the past two quarters. The momentum is expected to continue on combined synergies. We believe a wider range of product offerings will help drive the top line for the company in fiscal 2016 and beyond.
Moreover, the recent divestiture of BD Rx business to Fresenius Kabi USA is expected to be modestly positive for BD’s adjusted diluted earnings per share. Additionally, the company’s expansion into overseas markets, particularly the emerging markets, is a positive.
Unfavorable foreign exchange continues to hurt BD’s results and is expected to remain a potent headwind in fiscal 2016 as well. Moreover, lower demand for health care products as well as higher hospital and lab-testing expenditures remain areas of concern.
Other Stocks to Consider
Here are some other companies you may consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
AMN Healthcare Services AHS, earnings ESP of +2.44% and a Zacks Rank #1.
Abiomed ABMD, earnings ESP of +6.25% and a Zacks Rank #2.
T2 Biosystems TTOO, earnings ESP of +3.28% and a Zacks Rank #2.
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