Morgan Upgrades CR Bard

Good news yesterday for CR Bard (BCR). The stock was upgraded by the folks over at Morgan Stanley. It’s about time!

Higher growth, insulation from macro headwinds and potential upside from tax reform and balance sheet suggest there is a lot that can go right for Bard in 2017…

Diversified and insulated growth should be coveted this year. Bard revenue growth accelerated over 300 bps in ’16 to 7% organic growth on the back of new products and emerging markets, but we see durability into 2017 above 6%. The hallmark of Bard’s growth is that it is never reliant on any one product or division and continued product cadence in ’17 is likely. We see continued share gains in Surgical (Phasix), penetration in Oncology (PICCs ex US), and broader emerging market (EM) growth as likely adding more than half of the 6.2% growth rate. As for leverage to the bottom line, our view throughout ’16 has been one where Bard will provide preferential drop through to EPS above 10% as top line growth reaches and exceeds 6%. We saw this EPS inflection beginning in 1Q16 and expect it to continue in ‘17 where our model embeds ~12% underlying EPS growth. Our new $260 price target is based on ~20x our ’18e EPS of $12.94, which reflects a ~10% premium to the NTM S&P P/E vs.

In October, Bard said they see 2016 profits ranging between $10.23 and $10.28 per share.

(Courtesy Ben Levisohn at Barron’s.)

Posted by on January 4th, 2017 at 7:16 am


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