BDX – Market expectations are for Uniform ROA to remain at historical highs, but management’s concerns about revenue growth and cost synergies imply this may be unwarranted

• Becton, Dickinson and Company (BDX:USA) is currently trading near historical highs relative to UAFRS-based (Uniform) Earnings, with an 18.0x Uniform P/E, implying fairly bullish expectations for the firm. However, given management’s concerns about revenue growth and cost synergies, this may be unwarranted
• Specifically, management may lack confidence in their ability to achieve $350mn in cumulative cost synergies from the CareFusion acquisition by 2018. Moreover, they may lack confidence in their ability to drive low-double-digit growth in China for the full year, and in their ability to drive revenue growth of 4.5%-5.0% in BD Medical for the full year. Should the firm fail to sustain peak Uniform ROA, as management sentiment suggests, multiple compression and equity downside would be warranted