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Becton_ Dickinson _amp; Company _BDX_

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					Becton, Dickinson & Company
           (BDX)

              GROUP 3

     BRIAN REYNOLDS • ALEX MACK
   CHARLIE SHREVE •ANNIE VAN ALLEN
                Investment Thesis

 Expected Future Depreciation of U.S. Dollar


 Inelastic Products Result in Consistent Revenue


 Undervalued intrinsically by 16%


 Strong Balance Sheet with Merely 7% Debt
                  Company Summary

 Current Price: $65.25
 Market Cap: $15.86 billion
 Headquarters: Franklin Lakes, NJ
 Operations: Manufactures and distributes medical devices,
              reagents, and instruments worldwide.
 Operates in 3 segments:

                            BDX


     BD Medical        BD Diagnostics     BD Biosciences
                        Industry Overview

 Company operates in three industries
  Medical       Devices
    Outsourcing   distribution
    Consolidation

  Diagnostics

    Globalization

  Bioscience      Research Equipment
    Increased   R&D
                                   Industry Overview

   Medical Devices Industry Players
                                          Most Recent Annual
              Company              Ticker    Revenue (B)
    McKesson Corp.                 MCK $                101.7
    Cardinal Health, Inc.           CAH $                90.4
    AmerisourceBergen Corp.         ABC $                68.0
    Baxter International Inc.       BAX $                11.5
    Covidien Ltd.                   COV $                 9.9
    Owens & Minor, Inc.             OMI $                 6.9
    Becton, Dickinson and Co.       BDX $                 6.7
    Stryker Corp.                   STK $                 6.2
    Alcon, Inc.                     ALC $                 5.8


   Diagnostics Industry Players
                Company              Ticker     Market Cap (MM)
    Thermo Fisher Scientific Inc     TMO      $              14.06
    Corning Incorporated             GLW      $              13.27
    Becton, Dickinson and Co.         BDX     $               6.20
    Agilent Technologies, Inc.         A      $               6.17
    Covance Inc.                      CVD     $               2.33
    PerkinElmer Inc.                  PKI     $               1.96
                Comparative Advantages

 Strong Balance Sheet                               Cash Per   Current
                                        Company D/E Share ($)     Ratio
   Low debt                            A       0.83 4.08       2.42
   High cash                           BAX     0.48 3.52       2.24
                                        COV     0.39 2.4        2.52
   Acquisition opportunities           OMI     0.31 0.62       1.18
                                        BDX     0.23 4.24       2.55
 Limited Overall Risk                  Average 0.5  2.66       2.09
   Market diversity/global footprint

   Steady organic growth

 Foothold on HAI and Women’s Health
   Recent acquisitions

   Pending FDA approval
                                    Risks

 Foreign Currency
     If USD continues to appreciate…
 Economic
     Suppliers
 Consolidation of Industry
     Increased price competition
 Crude Oil Price Volatility
     Significant increase in raw material prices
         Income Statement/Assumptions

 Revenue
   Slow from 12.5% in 2008 to 11% in 2009

   Rebound to 12% in 2010

 Margins
   Gross: 51.5%

   Operating: 21.7%

   Profit: 15.8%

 Taxes
   27.5%
            Cost of Capital (WACC)

 Given Credit Markets, Revised Upward

                     Cost of Capital (WACC)
             Cost of Debt
             Cost of Debt: Bonds Outstanding   6.70%
             Cost of Debt (revised)            8.00%
             Cost of Debt after tax            5.20%
             Cost of Equity
             Risk-free rate                    2.68%
             Beta                                0.71
             E(rm)                               10%
             Cost of Equity (implied)          7.88%
             Cost of Equity (revised)          9.38%
                              Valuation

 Discounted Cash Flow
   Terminal Value
      3% Perpetual Growth                $67

      TEV/EBITDA Multiple                $80


 Comparable Companies
      Price/Earnings (ttm)                     $69

      Price/ Earnings, Forward (2010)          $72
                      Summary

 Inelastic Demand for Products
   “Recession-Proof ”



 Global Footprint and International Diversification

 Accelerating Research and Development

 Intrinsically and Relatively Undervalued: 10-15%


 Recommendation:        BUY

				
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