Becton, Dickinson and Company, also known as BD, is one of the best defensive names in medtech, particularly at a time when the economy is at risk of a recession, according to Wells Fargo. The firm upgraded the stock on Friday to overweight from equal weight, saying it’s better positioned than some of its industry peers to navigate upcoming macro challenges. “BDX shares have outperformed the S & P 500 over the past 4 recessions, which we believe reflects the company’s products being used in procedures that are less deferrable,” senior equity analyst Larry Biegelsen said in a note Friday. “Given BDX’s pricing power and the less elective nature of its products, we see BDX as an excellent defensive name given the risk of a recession.” He added that the overweight rating “reflects our view that BDX is well positioned to deliver on 5.5%+ base organic sales and double-digit underlying EPS growth.” Biegelsen noted that the company has been more proactive than competitors about using price to offset inflation pressure and investing in its supply chain. He also pointed out the company’s pathway to expanding operating margins “appears clear.” Financial targets from its December 2021 analyst day have remained intact or have improved, he said. “On the top line, our sense is that management is more confident in exceeding the 5.5% top-line growth, driven by accretion from the EMBC spin-off, accretion from recent tuck-in deals and strength of the underlying business,” Biegelsen said. “On the bottom line, BDX remains comfortable targeting double-digit EPS growth, which seems doable based on the revenue growth and margin expansion goals.” Wells Fargo expects the company to report a strong third quarter, adding that it’s well positioned for a strong 2023. It also sees the acquisition of Parata, a pharmacy automation company, as a positive driver for estimate revisions to next year’s forecast.
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