BDX Calls: Looks Can Be Deceptive, Options as Low as $1

We continue our options trading activities mid-week as we examine the options of a company operating in the healthcare sector. Becton, Dickinson and Company (NYSE:BDX) with its market capitalization of $22.44B is a global medical technology company engaged in the development, manufacture and sale of medical devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public.

Becton, Dickinson and Company operates in a business environment that is currently recording a boom in growth as baby boomers grow older and need more access to healthcare products and services. The company’s special interest in producing disposable healthcare products is an important source of income that allows the company to keep shareholders satisfied with dividends and to ensure an appreciation in its share price.

Performance So Far

BDX Chart

The chart above plots how shares of BDX have traded within the last one year as well as the 1-Month Price Returns within the same period. The stock has gained an impressive 20.14% in the last one year with a 52-week low of $96.73 and a 52-week high of 120.66. In addition, BDX has delivered 1-Month Price Returns of 74.21% in the last 12 months.

Shares of BDX are up some 0.14% as at 12:05PM EDT to trade around 117.01 per share. Interestingly, the stock has an RSI of 47.53 to should that the stock has just recently left “oversold” territory as new “buying” action starts on the company.

Fundamental Reasons to Be Long on BDX

  • Impressive Third Quarter Results

Becton, Dickinson and Company reported third quarter (Q3 2014) earnings on July 31 to meet analysts’ expectations on earnings and to top estimates on revenue.

The company reported adjusted EPS of $1.68 per share in the third quarter to mark a 9.1% increase over the EPS of $1.54 per share that was reported in the same quarter last year.  The reported earnings came in on par with the consensus analysts’ expectation.

Net earnings was reported at $326M to mark an 11.6% increase over the net earnings of $292M that was reported in the same period last year. Net earnings per share was up 12.7% at $1.69 per share compared to $1.50 in the year-ago quarter.

The company reported revenues of $2.15B to mark a 5.1% annual increase and to beat the consensus analysts’ estimate of $2.14B.

  • Vibrant Product Pipeline

It is no longer news that one of the major drivers to BD’s current success is the strength of its product offerings. The company is continuing with this innovative trend as its received 510(k) clearance and Clinical Laboratory Improvement Amendments (CLIA) waiver from the U.S. Food and Drug Administration (FDA) for nasopharyngeal swab specimens on the BD Veritor System, intended for Rapid Detection of Respiratory Syncytial Virus (RSV). BD Veritor System is the first commercially available CLIA-waived RSV test system that produces a digital result. It is also the third FDA-cleared and CLIA-waived offering from the company.

  • Strong Expansion Into Overseas Markets

Becton, Dickinson and Company is working assiduously to develop a strong foothold in overseas market and the company is especially focused on emerging economies. It might interest you to know that revenues from emerging markets contributed about 24.5% to the total sales that was recorded in the second quarter. In fact, the company’s international operation is growing revenue faster than the domestic operations. For instance, revenues generated in the domestic market increased 2.7% annually to $871M and revenues generated from overseas operations increased by 6.7% to $1.28B.

How to Trade BDX Options

A cursory glance at BDX’s share price around $117 per share would lead you into thinking that BDX options would be expensive. However, nothing could be farther from the truth and it is on this note that I introduce you to the BDX Dec 2014 125.000 call (BDX141220C00125000) at an asking price of $1.

— Daily Option Alerts

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