BDX-a possible bouncer tomorrow.
Becton Dickinson Earnings to Be Less Than Expected (Update4) (Adds details. Updates with closing share activity.)
Franklin Lakes, New Jersey, June 14 (Bloomberg) -- Becton Dickinson & Co., the largest U.S. maker of syringes, said earnings for the quarter and the year would be less than expected because it failed to achieve sales targets in Europe.
Shares of the company, which also makes Ace bandages, medical supplies and diagnostic test kits, plunged 8 3/4, or 22 percent, to 30 5/16 in trading of 8.6 million shares, nine times the three-month average. It was the biggest one-day drop in least 19 years, reducing the company's market value by $2.2 billion.
Becton Dickinson has been buying smaller medical companies overseas to make up for slowing sales in its syringe business. Investors are concerned that the new businesses aren't paying off. The company said revenue for the fiscal third quarter ending June 30 will be $30 million to $35 million less than estimates, meaning earnings will fall about 4 cents a share short of expectations. ''It's a huge disappointment,'' said Michael Mullen, an analyst at SG Cowen & Co. ''It couldn't be worse, after they had a disappointing first quarter and then came back with a strong second quarter. Now, they've blown themselves out of the water. They've hurt their credibility in a great way.''
Mullen, who said he will probably change his ''strong buy'' rating on the company, said the low share price makes Becton Dickinson an acquisition target.
Revenue for the fourth quarter also is expected to be shy of estimates, resulting in a 4 cents-per-share earnings shortfall, the company said.
Analysts had expected earnings of 42 cents for the third quarter and 46 cents for the fourth quarter. The Franklin Lakes, New Jersey-based company expects to earn $1.45 to $1.50 a share for the fiscal year ending September 30. It was expected to earn $1.57, the average estimate of analysts polled by First Call Corp.
Plan Gone Awry
Third-quarter revenue is likely to grow 4 percent to 5 percent over last year's $834 million, rather than the previously expected 7 percent to 9 percent growth, the company said.
Becton Dickinson said its plan to increase revenue growth to 10 percent a year was hurt by currency-exchange rates, lower-than- expected sales in Western Europe, especially Germany, and emerging markets, and poor performance of its home-health-care business. ''Europe is still growing at high single-digits and some emerging markets are growing by as much as 15 percent. We're trying to learn from our experience here,'' President Edward Ludwig said on a conference call. ''These are variances from our internal expectations.''
Acquisitions
Becton Dickinson bought closely held Clontech Laboratories Inc. for $200 million this year to expand its drug-development technology. It also purchased Biometric Imaging Inc., a closely held maker of transfusion equipment, Luther Medical Products Inc., a maker of catheters and needles, and the BOC Group's medical device unit for $452 million in April.
It probably will exit the home-diagnostic market since its newly introduced products have sold less than expected as competitors lowered prices, it said.
Becton Dickinson also said today it will market Medisys Plc's NicSaf needle-disposal system in Singapore, Vietnam, Myanmar, Brunei and Micronesia.
The company said it would have third-quarter charges of $75 million to $100 million, related to its voluntary retirement program and its home-health care business, which sells thermometers and other medical devices for the home.
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