Becton, Dickinson & Company has experienced a remarkable surge in its stock value, climbing over 30% since announcing the strategic sale of its Biosciences & Diagnostics division to Waters. This significant transaction, valued at an impressive $17.5 billion, has not only bolstered BDX's financial position by reducing net debt but also secured a substantial equity stake in Waters. This divestiture is a pivotal moment for the company, paving the way for a potential re-rating of its stock as it focuses on its core strengths and leverages new growth opportunities.
The agreement to sell the Biosciences & Diagnostics segment to Waters was a move anticipated by many market observers. The valuation of the divested segment at five times sales and nineteen times EBITDA underscores the attractiveness of the deal for Becton, Dickinson. This substantial infusion of capital and the acquired equity stake in Waters provide BDX with considerable financial flexibility. This strategic shift allows Becton, Dickinson to streamline its operations, concentrate on its most profitable areas, and potentially accelerate innovation within its remaining business units. The market's positive response reflects confidence in the company's long-term vision and its ability to execute such a large-scale transaction effectively.
Beyond the immediate financial benefits, Becton, Dickinson's operational performance remains robust. The company projects an impressive nearly 10% increase in adjusted earnings per share (EPS) for fiscal year 2024, reaching $14.40. Furthermore, management anticipates sustained low single-digit constant currency growth through 2026, indicating a stable and predictable revenue stream. These projections highlight the underlying strength of BDX's core businesses, which continue to deliver consistent results despite broader economic uncertainties. The divestiture is expected to enhance these growth trajectories by allowing for a more concentrated allocation of resources and strategic investments.
Shareholder returns are also a key focus for Becton, Dickinson. The current mid-teens earnings multiples make share buybacks an attractive option, potentially enhancing shareholder value. Moreover, the equity stake in Waters, now valued at over $50 per Becton, Dickinson share, provides an additional layer of financial strength and valuation upside. This stake offers BDX flexibility, either through potential future sales to fund further strategic initiatives or by holding it to benefit from Waters' growth. This unique position provides Becton, Dickinson with both immediate financial leverage and long-term investment potential, making it a compelling opportunity for investors.
The strategic divestiture of the Biosciences & Diagnostics unit marks a transformative period for Becton, Dickinson. The substantial proceeds from the sale, coupled with the equity in Waters, empower the company to pursue future growth avenues, reduce debt, and create additional shareholder value. With a clear focus on its core businesses, a solid financial outlook, and attractive opportunities for capital returns, BDX is well-positioned for sustained success and a potential re-evaluation by the market in the coming years.