Becton Dickinson, a prominent player in the medical technology field, made headlines on Thursday as it adjusted its full-year organic revenue forecast after its fiscal third-quarter sales fell short of Wall Street's expectations, particularly due to challenges faced in the Chinese market. The company now anticipates that organic revenue for fiscal 2024 will grow in a range of 5% to 5.25%, a decrease from the earlier projection of 5.5% to 6.25%.
This revised outlook is a reflection of the evolving market dynamics that numerous companies are encountering, as noted by Chief Financial Officer Christopher DelOrefice during an earnings call, as recorded in a Capital IQ transcript. DelOrefice pointed out several "transitory" market dynamics that have impacted performance, including expected inventory destocking within the pharmaceutical systems industry.
The company has also raised its expected full-year adjusted earnings per share (EPS) to between $13.05 and $13.15, increasing the lower end of its previous forecast from $12.95. Revenue projections now stand around $20.1 billion, compared to the earlier estimate of between $20.1 billion and $20.3 billion.
The financial community is currently anticipating normalized EPS of $13.10 against a revenue expectation of $20.25 billion. In the latest quarter, adjusted EPS surged to $3.50, up from $2.96 in the same period last year, exceeding analysts' projections of $3.31. Revenue saw a modest increase of 2.3%, reaching $4.99 billion, although it fell short of the $5.08 billion forecast by analysts.
Notably, U.S. revenue experienced a growth of 4.3%, amounting to $2.89 billion, while international revenue dipped slightly by 0.3% to $2.1 billion. DelOrefice elaborated that the organic revenue growth of 5.2% experienced during the third quarter was driven partially by volume growth and increased market share, which was, however, tempered by the setback in the Chinese market. On the stock market front, shares of Becton Dickinson took a hit, declining by 3.9% during Thursday's afternoon trading. DelOrefice maintained an optimistic outlook for the fourth quarter, projecting margin acceleration as a result of the company's BD Excellence initiatives and ongoing improvements aimed at leveraging expenses during what is expected to be a strong revenue performance, particularly with their Alaris product line.
For fiscal year 2025, he mentioned that a 10% growth in EPS could serve as a reasonable baseline for expectations. Looking further ahead to 2030, Chief Executive Tom Polen expressed confidence in the opportunities presented by healthcare process automation and informatics, particularly in the realm of artificial intelligence, indicating that this sector could evolve into a business exceeding $7 billion.
He also highlighted the company’s PureWick platform, which he believes has the potential to develop into a billion-dollar franchise by 2030, sustaining its momentum for double-digit growth. In a notable move, Becton Dickinson agreed in June to acquire Edwards Lifesciences' critical care product group for a substantial sum of $4.2 billion in cash, with the transaction expected to finalize before the close of the calendar year. Current share price of Becton Dickinson stands at $233.71, reflecting a change of -7.35, or a percent change of -3.05..