KeyBanc Initiates Becton, Dickinson And Co. With Bullish Stance

Becton Dickinson and Co (NYSE: BDX) was initiated with a top-notch rating by KeyBanc Capital Markets Thursday. 

The Analyst

KeyBanc analyst Matthew Mishan initiated coverage on Becton Dickinson with an Overweight and $260 price target.

The Thesis

"We believe [the company] is positioned to win long-term, as it is playing an integral role in global health care systems leveraging its scale in developed and emerging markets to provide increasing value to customers over time," Mishan said in a note. (See the analyst's track record here.) 

Mishan sees the acquisition of C R Bard Inc (NYSE: BCR) as an opportunity to increase Becton Dickinson's scope, adding more clinically complex medical devices and a defined channel into the homecare segment. 

CR Bard's 5-7-percent organic revenue growth profile is accretive to Becton Dickinson's 4-5-percent growth, the analyst said. The momentum is sustainable, given a pipeline of new product, indications and market opportunities — and potential revenue synergies, he said. 

"The combined entity generates sufficient FCF [initially $3B annualized] to delever over the next 3 years, while still comfortably growing its dividend." 

KeyBanc's earnings per share estimates for the combined company are: $10.77 in 2018, $12.49 in 2019 and $13.71 in 2020.

The Price Action

Becton Dickinson shares have gained about 34 percent over the past year.

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Photo courtesy of Becton, Dickinson And Co.