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Becton Dickinson Rises on Plans to Enter Automation Market

Story Highlights

Becton Dickinson’s move to acquire an automation solutions provider will help the company surpass its sales growth and margin targets for 2025.

Medical technology company Becton Dickinson and Co. (NYSE: BDX) has signed an agreement to acquire a pharmacy automation solutions provider, Parata Systems, for $1.525 billion in cash.

North Carolina-based Parata’s offerings include pharmacy workflow solutions, high-speed robotic dispensing technologies and medication adherence packaging. For the year ended March 31, 2022, the company recorded revenues of around $220 million.

Tom Polen, the Chairman, CEO and President of Becton Dickinson (BD), said, “Parata expands BD’s solutions to a new area of the high-growth pharmacy automation space. Parata has a highly attractive financial profile and compelling value proposition that meets all of our rigorous investment criteria on growth, profitability and returns.”

The deal, which is expected to close next year, is likely to be immediately accretive to Becton Dickinson’s adjusted EPS, adjusted operating margin and revenue. It will also help the company surpass its sales growth and margin targets for 2025.

About Becton Dickinson

New Jersey-based Becton Dickinson makes medical devices, diagnostic products and laboratory equipment. Its products are used by the pharmaceutical and healthcare industries, life science researchers, clinical laboratories, physicians and the general public.

Wall Street’s Take

Following the announcement of the transaction, Piper Sandler (NYSE: PIPR) analyst Jason Bednar maintained a Hold rating on the stock with a $255 price target (1.4% downside potential).

Bednar said, “The deal will give Becton an immediate leadership position in an adjacent, high-growth U.S. market.”

Additionally, Rick Wise of Stifel Nicolaus reiterated a Buy rating on BDX with a price target of $290 (12.1% upside potential).

Wise believes that the deal is “another positive step forward in the multi-faceted Becton Dickinson transformation.”

Overall, the stock has a Hold consensus rating based on two Buys and six Holds. BDX’s average price target of $273.14 implies 5.6% upside potential from current levels.

Bloggers’ Stance

TipRanks data shows that financial bloggers are 100% Bullish on BDX, compared to the sector average of 70%.

Conclusion

After the announcement was made on Monday, BDX stock gained 2.5% to close at $258.72. The deal will complement Becton Dickinson’s portfolio of medication management solutions and open up the $600-million pharmacy automation market.

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