Piper Sandler on Monday reduced its 12-month price target for Becton Dickinson to $170.00 from $205.00 while retaining a Neutral rating on the medical technology firm. That revised target sits below the stock's most recently quoted price of $207.39 and is conservative relative to a separate Fair Value assessment that indicates the shares may be undervalued despite a trailing price-to-earnings ratio of 34.29.
The broker's update followed Becton Dickinson's fiscal first-quarter results. The company reported revenue of $5,252 million, a 0.4% increase year-over-year on a constant currency basis. That figure topped consensus expectations of $5,147 million and exceeded management's guidance, which had flagged low-single-digit organic sales declines. The firm has generated 6.22% revenue growth over the past twelve months, producing total revenue of $21.92 billion.
Despite beating headline revenue estimates, Becton Dickinson posted flat organic growth for the period and identified ongoing weakness across several business areas, including its Alaris product line, China operations, and vaccine-related demand. Management also reported a year-over-year decline in margins attributable in part to tariff-related effects, though margins were slightly ahead of consensus forecasts.
On profitability, the company recorded adjusted earnings per share of $2.91 for the quarter, beating expectations by $0.10. The quarter's gross profit margin stood at 47.95%, and diluted earnings per share over the trailing twelve months totaled $6.12. In alternative presentations of the quarter, revenue was also described as $5.3 billion against an anticipated $5.15 billion, and adjusted EPS was compared with analyst forecasts of $2.81.
Piper Sandler's note also referenced corporate changes now behind Becton Dickinson: the reverse Morris trust transaction with Waters Corporation has closed, and management has reaffirmed the core assumptions underpinning guidance. The company carries total debt of $19.54 billion and a debt-to-equity ratio of 0.77 under the current capital structure.
Despite the quarter's beats on revenue and earnings, Piper Sandler expressed concern that Becton Dickinson's top-line growth outlook over the next 12 to 24 months appears meager, and the firm questioned the sources of material earnings-per-share expansion once the company's post-transaction capital structure is in place.
Other sell-side responses to the results echoed a mix of affirmation and caution. Jefferies lowered its price target to $190 from $220 but maintained a Buy rating. RBC Capital reiterated a Sector Perform rating with a $210 target; RBC analyst Shagun Singh noted that the company delivered top- and bottom-line results above consensus expectations. Still, some investors and analysts flagged operational margin pressures and uncertainty around future guidance.
Additional performance and corporate metrics included expectations for net income growth this year and the company's long record of shareholder payouts: Becton Dickinson has raised its dividend for 55 consecutive years and currently yields 2.03%.
Summary
Becton Dickinson reported a slight year-over-year revenue increase in fiscal Q1 and beat sales and EPS expectations, but organic growth was flat and certain end markets remain pressured. Piper Sandler cut its price target to $170 while maintaining a Neutral rating, and other firms adjusted targets and ratings following the results. Management has completed a reverse Morris trust transaction and reaffirmed core guidance assumptions, though analysts remain focused on modest near-term top-line prospects and margin dynamics.
Key points
- Piper Sandler reduced its price target for Becton Dickinson to $170 from $205 and kept a Neutral rating; the stock was trading above that target at $207.39.
- Fiscal Q1 revenue was $5,252 million, a 0.4% increase year-over-year on a constant currency basis, beating consensus of $5,147 million; adjusted EPS was $2.91, $0.10 above forecasts.
- Margins were down year-over-year due in part to tariffs but slightly outperformed consensus; total debt is $19.54 billion and the debt-to-equity ratio is 0.77 following a completed reverse Morris trust transaction.
Sectors impacted
- Healthcare equipment and supplies - company-level revenue and margin trends.
- Financial markets - analyst price target adjustments and investor sentiment.
Risks and uncertainties
- Near-term top-line growth risk - analysts highlighted a meager growth outlook over the next 12-24 months that could constrain revenue expansion in healthcare equipment and supplies.
- Margin pressure - tariffs and operational headwinds have reduced margins year-over-year and pose a risk to profitability.
- Capital structure and leverage - the post-transaction capital structure, with $19.54 billion in total debt and a 0.77 debt-to-equity ratio, raises questions about where meaningful EPS growth will originate.
Investors and market participants will likely watch upcoming guidance, execution in pressured business areas such as Alaris, China, and vaccines, and how management allocates capital within the new capital structure.