Becton Dickinson posted year-over-year revenue growth in its fiscal year 2023 on Thursday, but Wall Street was not impressed with the company’s 2024 forecast.
Analysts called out BD’s profitability forecast for next year in research notes to investors as lower than what was anticipated, with J.P. Morgan analysts writing that the guidance came in “well below expectations.”
BD forecast its fiscal year 2024 revenue in a range of from $20.1 billion to $20.3 billion, reflecting modest growth over 2023. The company expects earnings per share to be in a range of from $12.70 to $13.00.
“While we’ve been saying since the F3Q call that FY24 numbers need to move lower, we don’t think investors were expecting a sub-$13.00 guide,” J.P. Morgan analysts wrote. “The initial FY24 EPS guide of $12.70-$13.00 will be a disappointment to investors today, with a focus on how conservative vs. realistic is it, especially with a 1Q guide well below the Street.”
When questioned about BD’s guidance and fiscal year 2023 results, CEO Tom Polen said on a Thursday earnings call that the company feels great about its performance and forecast for next year.
William Blair analysts wrote the “quarter was directionally in line with high-level metrics, though the miss to operating margins for both the fourth quarter and fiscal 2024 guidance is a bit frustrating.”
The forecast may have spooked investors, as BD’s stock had dropped by just over 9% to $232.24 when the market closed Thursday.
CFO Chris DelOrefice outlined economic challenges the company expects to face next year, including a soft market in China, inflation and labor challenges. He added that China will be the company’s largest headwind next year, and BD expects flat to modest revenue growth in the market.
Stifel analysts were a bit more lenient on BD than others, writing that they “acknowledge that this negative F2024 investor expectation ‘reset’ is surprising/disappointing, though we’re inclined to look beyond the near-term ‘noise.’” The analysts added that BD’s management has been able to work through challenges before, like the Alaris recall.
BD has been preparing for its Alaris infusion pump system to re-enter the market following a new 510(k) clearance from the Food and Drug Administration in July. The company recalled Alaris pumps and paused sales of devices beginning in February 2020 after the FDA required the company to file a new comprehensive 510(k) application to cover software updates.
Polen said the company is about 90 days into the process of market re-entry and is on track or slightly ahead of expectations. BD has signed some contracts and started shipments, but Polen said it can take three months or longer from the purchase order to install, and the full sales process can take six months or longer to complete, so it’s still early.
The company expects about $200 million of Alaris sales in its next fiscal year, according to J.P. Morgan.