According to Wells Fargo, Becton, Dickinson & Co., also known as BD, is one of the best defensive names in medtech, especially at a time when the economy is in danger of recession. The firm on Friday upgraded the stock from similar weight to overweight, saying it is better positioned than some of its industry peers to navigate the upcoming macro challenges. Senior equity analyst Larry Begelson said in a note Friday, “BDX shares have outperformed the S&P 500 during the past 4 recessions, which we believe is driving the company’s products into less deferred processes being used.” ” “Given the pricing power of BDX and the less optional nature of its products, we see BDX as an excellent defensive name given the risk of a recession.” He added that the overweight rating “reflects our view that BDX is well positioned to deliver double-digit 5.5%+ base organic sales and EPS growth.” Beagleson noted that the company has been more proactive than competitors about offsetting inflationary pressures and using prices to invest in its supply chain. He also pointed to the company’s path to expanding operating margin “seems clear.” He said the financial targets have remained intact or improved from the analyst day of December 2021. “On the top line, our sentiment is that management is more confident in more than 5.5% top-line growth, driven by accretion from the EMBC spin-off, accretion from recent tuck-in deals and the strength of the underlying business, Beagleson said. “On the bottom line, BDX remains comfortable targeting double-digit EPS growth, which seems feasible based on revenue growth and margin expansion targets.” Wells Fargo expects the company to report a strong third quarter, saying it is well positioned for a strong 2023. It also sees the acquisition of Parata, a pharmacy automation company, as a positive driver for forecast revisions for next year.
Related
