By Peet Serfontein & Zimele Mbanjwa.
Becton Dickinson and Co. is a global medical technology company engaged in the development, manufacturing and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, physicians, life science researchers, and others. The company also provides innovative solutions that help advance medical research and genomics, enhances the diagnosis of infectious diseases and cancers, improves medication management, promotes infection prevention, equips surgical and interventional procedures, and supports the management of diabetes.
Between FY21 to FY25, through its BD25 strategy which is based on three key themes - Grow, Simplify, and Empower; the company is aiming for base revenue CAGR of 5.5%, base adjusted operating margin expansion of 540bps and double-digit base adjusted EPS CAGR. So far, between FY21 to FY23, revenue has declined by a CAGR of -2.2%, the adjusted operating margin has expanded by 130bps, while the adjusted EPS CAGR has been -3.4%.
Technically, the stock is trading within a well establish price range, which renders it a compelling investment opportunity (see the grey rectangle on the main chart). A breakout above resistance can signal that the stock has gained sufficient momentum to overcome selling pressure, indicating strong buyer interest. This breakout, especially on high volume, is often interpreted as a bullish signal, suggesting that the stock has the potential to move higher. The insert on the main chart is the price distribution calculation for the stock over the last five years.
The stock is trading below its 200-day simple moving average of ~$254.20, making this a contrarian trade.
Emerging upside momentum, according to the MACD indicator as well as sidewards movement of the on-balance volume indicator, supports a bullish stance.
Share Information
| Share Code | BDX |
|---|---|
| Industry | Healthcare Equipment & Services |
| Market Capital (USD) | 69.07 billion |
| One Year Total Return | -0.30% |
| Return Year-to-Date | -1.95% |
| Current Price (USD) | 239.07 |
| 52 Week High (USD) | 287.32 |
| 52 Week Low (USD) | 228.62 |
| Financial Year End | September |
| The stock price has displayed high volatility over the past year. Although currently at lower levels, we expect an imminent break toward the upside. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 12.21 | 13.04 | 14.35 | 15.77 |
| Growth (%) | 6.76 | 10.10 | 9.87 | |
| Dividend Per Share (USD) | 3.68 | 3.83 | 3.93 | 4.31 |
| Growth (%) | 4.13 | 2.51 | 9.80 | |
| Forward PE (times) | 18.34 | 16.66 | 15.16 | |
| Forward Dividend Yield (%) | 1.60 | 1.64 | 1.80 | |
| The market expects decent earnings growth over the short- to medium-term. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | CARZ - Buy (Continue to hold) |
CVX - Buy (Continue to hold) |
HSY - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 53.61 | 147.89 | 191.47 |
| Current | 55.30 | 150.60 | 194.84 |
| Movement | 3.2% | 1.8% | 1.8% |
|
An incomplete symmetrical triangle pattern remains of interest. The ETF remains just above its 200-day moving average. Fading upside price momentum is still a concern.
Our profit target remains at $60, with a trailing stop-loss at $53.20. Exit the trade around 22 May 2024. |
The stock price is holding above the key support level, and this remains attractive. Upside price momentum is supportive.
Our profit target is $167, with a trailing stop-loss of $147.40. Exit the position around 28 June 2024. |
The formation of a fifth wave (per Elliot wave analysis) in the stock price remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Upside momentum is supportive.
Our profit target remains at $220, with a trailing stop-loss at $188. Exit the trade by 26 April 2024. |
| Share Name and position | DAY - Buy (Continue to hold) |
LKQ - Buy (Continue to hold) |
KMX - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 69.45 | 47.92 | 73.30 |
| Current | 70.21 | 48.09 | 72.54 |
| Movement | 1.1% | 0.4% | -1.0% |
|
Note: Ceridian (CDAY) changed its name as well as its ticker to Dayforce (DAY) on 1 February 2024.
The stock is challenging the upper limit of an emerging symmetrical triangle pattern. The stock crossed above its 200-day moving average. Upside price momentum supports the trade idea. Our profit target is $80, with a trailing stop-loss of $66.15. Exit the position around 8 May 2024. |
The development of a large bullish flag pattern remains of interest. The stock remains below its 200-day moving average. Upside price momentum supports the trade idea.
Our profit target is $55, with a trailing stop-loss of $46.20. Exit the position around 22 May 2024. |
A price in a smaller inclining channel pattern remains of interest. The stock is testing its 200-day moving average. Upside price momentum has halted, which is a concern.
Our profit target is $86, with a trailing stop-loss of $68. Exit the position around 12 April 2024. |
