BECTON DICKINSON & CO (BDX): what the price requires

At today's price, BECTON DICKINSON & CO (BDX) is priced for +11.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BDX

Headline

FieldValue
TickerBDX
CompanyBECTON DICKINSON & CO
Current price$153.53/sh
CompositionMedication Delivery Solutions 21% / Medication Management Solutions 16% / Pharmaceutical Systems 11% / Advanced Patient Monitoring 5% / Specimen Management 9% / Diagnostic Solutions 8% / Biosciences 7% / Surgery 7% / Peripheral Intervention 9% / Urology and Critical Care 8%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed5.7%
Operating margin today9.6%
Margin compression implied-3.9pp
Implied growth11.6%
Multiple paid31x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~9.5pp (computed at the 7% minimum rate; the CAPM rate 6.8% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~6.3 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.40σ
cohort percentile (of 112 peers)79
sustained it ~5 years at this level54%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power/growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset4.36x4expensive
Earnings4.56x2expensive
Relative1.13x3expensive
Growth1.61x3expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.

Per-Model Detail (n=12)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noReference only (OCF-based, capex excluded): OCF $0.7B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$126.071.22xyesP/E 28.16x (blended: static sector reference 24x + trailing (TTM) 38x), scenarios: 23.8x / 28.2x / 32.5x (bear / base = reference held flat / bull), EV/EBITDA 16x
Simple DDMGrowth$95.451.61xyesDPS $4.13, g=4.7% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$8.5917.87xyesStage 1: -40% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$43.843.50xyesBV/sh $85.99, ROE (TTM) 4.7%, ke 9.3%
Two-Stage Excess ReturnAsset$29.425.22xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$101.011.52xyesRev $21.4B, growth 2% (input: historical growth; tapered), Terminal P/S: 1.7x / 2.0x / 2.3x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$36.954.16xyesNormalized EBIT (5y avg op income, one-time charges added back) $2.37B × (1−21%) / WACC 6.8% → EPV (no growth)
Residual IncomeAsset$26.895.71xyesBV $85.99 + 5yr PV of (ROE (TTM) 4.7% − Kₑ 9.3%) × BV; BV grows 3.1%/yr
Graham NumberAsset$74.392.06xyes√(22.5 × EPS $2.86 × BVPS $85.99) — Graham's conservative floor
EV/EBITDA RelativeRelative$135.281.13xyesEBITDA $3.40B × sector EV/EBITDA 16.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$2.4063.97xyesEPS $2.86 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$2.2967.04xyesBV $85.99 × (ROIC 0.2% / WACC 6.8%) (excluded from median)
P/Sales SectorRelative$304.530.50xyesRevenue $21.37B × sector P/S 4.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$30.924.97xyesEPS $2.86 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$16.5b
Net debt / NOPAT (after-tax)10.91x
Net debt / operating income (pre-tax)8.62x
Interest coverage3.2x
Share count CAGR (buyback)-6.4%
Burning cashno

Bullet Takeaways

Bull Case

Begin with the loudest worry, because it is also the bull case once you turn it over: the $16.5 billion debt load. That number looks heavy against trailing operating income, but it is the residue of an acquisitive build into one of the broadest medical-technology portfolios in the industry, and BD has just monetized a large piece of it. The February 2026 separation of the Biosciences and Diagnostic Solutions business into a combination with Waters valued those operations at roughly $18.8 billion, which gives the company a path to a leaner, more focused "New BD" and proceeds to address leverage. The leverage is real; it is also being actively managed down rather than ignored.

What remains is a portfolio with genuine recurring economics. BD's strength is the razor-and-blade nature of its core: syringes, catheters, blood-collection systems, and infusion devices that hospitals buy continuously and switch away from reluctantly. The 10-K shows where the growth lives, citing the Peripheral Intervention unit's peripheral vascular disease platform and double-digit growth in sales of the Urology and Critical Care unit's PureWick offerings. These are consumable-driven, installed-base businesses where each placed device pulls years of disposable revenue behind it. That is why the peer-multiple methods, the ones that compare BD to other large medical-device companies, support the price even as the absolute multiple looks full.

The reframe is focus. For years BD was a sprawl of ten reporting units spanning everything from flow cytometry to surgical instruments. The Waters combination strips out the diagnostics and life-sciences research lines and leaves a company concentrated in medication delivery, medication management, and interventional devices, the parts with the steadiest hospital demand. A more focused BD can be valued on a cleaner comparison set, and management's decision to raise full-year EPS guidance after the second quarter signals confidence that the remaining business carries the load.

Bear Case

The structural problem sits on the balance sheet, and it constrains everything else. BD carries net debt of about $16.5 billion against gross debt of roughly $17.3 billion, which is close to seven times pre-tax operating income, with interest coverage near 3.9 times. For a mature medical-device company growing in the low-to-mid single digits, that is a lot of leverage to service, and it leaves little slack. The 10-K's own risk discussion points to exposure to general global, regional or national economic downturns and macroeconomic trends, including heightened inflation, and a heavily levered company feels those pressures with less cushion. Debt at this scale narrows the menu: it competes with R&D, with acquisitions, and with the dividend for every dollar of cash flow.

The valuation gives the bear its teeth. At about 30 times company-wide operating income, only the peer-multiple family reaches today's price; the asset-based, earnings-power, and growth-DCF methods all read it as expensive, with the asset lens at roughly four times what the static economics support. The price assumes operating profit grows about 10% a year for five years, a pace within reach in good years but one that just over half of comparable companies have historically sustained for five. For a portfolio that grew 2.6% on a currency-neutral basis in the most recent quarter, the gap between the priced-in growth and the underlying organic pace is the crux of the bear thesis.

There is also execution risk in the transition itself. Separating and combining a roughly $18.8 billion business is a large undertaking, and the divested operations are now accounted for as discontinued operations, which complicates the comparison a holder uses to judge the remaining company. The growth that once came from the diagnostics and life-sciences units no longer counts, so New BD has to generate the priced-in pace from a narrower base. If the remaining portfolio grows more slowly than the multiple assumes while the debt stays elevated, the only valuation family currently defending the price has less to stand on.

Valuation

The price is paying a premium multiple for a steady, mature business, and the methods disagree sharply about whether it is earned. At roughly 30 times company-wide operating income, the level implies about 10% annual operating-profit growth sustained for five years. That is within what BD has delivered in stronger years, so the question is duration rather than rate, and history is sobering: a little over half of comparable companies sustained that pace even five years.

Only one method family reaches the price. Peer multiples, comparing BD to other large medical-device makers, justify today's level; the asset-based, earnings-power, and growth-DCF lenses all say expensive, the asset read at about four times the static economics. When a single family defends the price and every other says expensive, the support is relative rather than absolute: the market is paying a sector-appropriate multiple for a sector-leading franchise, not a price the company's own cash generation independently warrants. That is a defensible position for a diversified consumable-device business, but it depends on the peer group staying richly valued.

Solvency is where the caution concentrates. Net debt near $16.5 billion at close to seven times pre-tax operating income, with interest coverage around 3.9 times, is the dominant balance-sheet fact, and the recently completed separation of the diagnostics and life-sciences business is the lever management is using to address it: a roughly $18.8 billion transaction reshapes both the portfolio and the path on leverage. The downside here is not distress, coverage is adequate, but the debt caps the company's flexibility. A buyer at this price is accepting a premium multiple on a focused but levered franchise, with the deleveraging story as the part that has to go right.

Catalysts

The defining event is structural. On February 9, 2026, BD completed the spin-off of its Biosciences and Diagnostic Solutions business and combined it with Waters Corporation, a transaction that valued those operations at about $18.8 billion based on the Waters share price near closing. The result is "New BD," a more focused medical-technology company, and all forward guidance now reflects that continuing business with the separated operations reported as discontinued operations.

Second-quarter fiscal 2026 results came in ahead of expectations. Revenue was $4.714 billion, up 5.2% reported and 2.6% on a currency-neutral basis, with adjusted diluted EPS of $2.90 against a $2.78 consensus. On the strength of the quarter, BD reaffirmed its revenue guidance and raised full-year adjusted EPS guidance to $12.52 to $12.72. A guidance raise alongside a major separation is the signal management wants the market to weigh.

The watch items are the integration and deleveraging that follow the Waters combination, and whether New BD's organic growth, in the low-to-mid single digits currency-neutral, can support the premium multiple the price carries. The next several prints will show how the standalone company performs without the divested diagnostics and life-sciences revenue, which is the cleanest test of the focused thesis.

Peer Cohorts (Per Segment, With Filing Citations)

BD Medical (reported)

BD Life Sciences (reported)

BD Interventional (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

BD Q2 FY2026 results / 8-K, February 2026 · BD Q2 FY2026 earnings release · BD 8-K, February 2026

View the full interactive BDX report on boothcheck