Medical equipment giant Becton Dickinson's (NYSE: BDX) stock has meandered since recommended on March 17, 2009 at a price of $65.66, with volatility, most likely due to U.S. federal health care reform legislation uncertainty, but look for better quarters ahead, when the dust settles, which is why I'm reiterating my Buy rating for the company's shares. In FY2010, Becton's revenue growth should total about 5-7%, after essentially flat revenue in FY2009. Hospital spending cutbacks will hurt, but BDX will make up for the aforementioned with increased government orders, lower operating costs, and moderating raw material costs.
Further, H1N1 flu-related spending will provide some additional revenue in FY2009; beyond this year, this stream will depend on the virus' activity and hospitalization rates. The First Call FY2009/FY2010 EPS estimates for BDX are $4.96 to $5.09.
Technically, Becton Dickson stock chart displays the aforementioned range-bound/volatility. However, the stock has found support at/near $62, and has so far not retested a $60 May low, another encouraging sign.
Stock Analysis: Becton Dickinson is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in BDX now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your BDX position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $43.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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