A leading medical technology company, Becton, Dickinson and Co. (NYSE:BDX)‘s earnings were better than expected. It is one of the few medical companies that is able to deliver organic growth in a challenged healthcare industry.
A decent quarter
Becton, Dickinson and Co. (NYSE:BDX
) reported revenue of $2 billion for the quarter and profit of $275.6 million, beating Wall Street’s estimate by $0.04 per share. Revenue from sales in the U.S. improved slightly, but the company’s international sales surged more than 6% in comparison to the same period last year, mainly because of emerging market growth. In its medical and diagnostic segments the company reported solid 4% growth, but its bio-sciences division reported a growth of only 0.5%.
Becton, Dickinson and Co. (NYSE:BDX) acquired Cato Software Solutions, a company that provides a portfolio of comprehensive medication safety software solutions. CSS’ services should help to prevent medication errors and improve efficiency in the pharmaceutical sector. The acquisition should add to the company’s revenue.
Furthermore, the company has entered into pharmaceutical manufacturing with Becton, Dickinson and Co. (NYSE:BDX) Simplist, for a range of ready-to-administer, pre-filled generic injectables. These injectables will be manufactured and marketed by BD Rx Inc., a wholly-owned subsidiary of Becton, Dickinson and Co. (NYSE:BDX). The company will launch 20 to 30 drugs over the span of a few years, which I believe is a smart step as they are not rushing their new manufacturing unit.
The company enjoys a dominant position in the therapy side of the market. Its needles, pens, and syringes place it in a better position to benefit from the growing number of diabetics. This reward comes with lesser reimbursement exposure and risk of competition compared to companies on the device side of diabetes.
A company that helps you fight diabetes
Pharmaceutical company Novo Nordisk A/S (ADR) (NYSE:NVO)
is one of those companies which prove that being less diversified can be good too. This company concentrates on diabetes care, and produces almost half of the worlds insulin requirement with products such as Levimar, NovoRapid, and NovoMax.
The company has nine products in late stage development. These products include Turoctocog Alfa for hemophilia treatment, Liraglutide for obesity, and two new insulins, Tresiba and Ryzodeg. Novo Nordisk A/S (ADR) (NYSE:NVO) is also concentrating on a new segment, inflammation. A lot of progress in this segment has been made, with seven drugs currently in phase I and II trials.
Novo Nordisk A/S (ADR) (NYSE:NVO) yields a dividend of 1.9% and its sales have almost doubled in the last five years. The company is a good bet for investors looking to diversify their portfolio.
A look beyond
Covidien plc (NYSE:COV)
is facing some challenging times since it reported sluggish results for the second quarter. The revenues were slightly up in comparison to last year, but profits were considerably down, due to lower margins and the adjustment of restructuring costs.
Mallinckrodt, the company’s pharmaceutical business, is being spun-off to unlock value, but it seems that the market has already valued it in the current share price. The company’s momentum is slowing, and to build it up it needs to focus on emerging markets. Currently I believe that its better to wait and watch when it comes to Covidien plc (NYSE:COV), as its losing its market share and the stock looks perfectly valued to surge further up.
The healthcare sector does not offer the promise of great share price hikes in a short span of time, but it does somewhat assure stability. More than half of Becton, Dickinson and Co. (NYSE:BDX)’s revenue comes from outside the U.S., which diversifies its operations and risks. Currently, only a quarter of the company’s operations are in the emerging markets, and these markets offer the potential for more than double-digit growth.
At a P/E ratio of 17.2 the company is fairly priced, and the company’s share repurchase program and stable dividends should attract income investors.
The article Does the Healthcare Industry mean Stability? originally appeared on Fool.com is written by tarun bachhawat.
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