Becton, Dickinson and Company (BDX)

Tecnología médica

BD is a global scale medical technology manufacturer —high-volume hospital supplies, connected devices, injection systems for pharmaceutical companies, and interventional devices— that just completed the spin-off of its Biosciences and Diagnostic Solutions business (combined with Waters) and remains a more focused company, with 6% return on capital dragged down by goodwill from decades of acquisitions (CareFusion, Bard, Advanced Patient Monitoring) but with margins expanding as separation costs dissipate; at today's prices it trades Preserves value with an estimated +2% total return over 5 years.

Moat Compounder estimates the intrinsic value of Becton, Dickinson and Company (BDX) at $186 per share on a five-year horizon. With the stock at $187.62 at 2026-09-03 close, the expected total return is 2.5% per year: preserves value. The analysis draws on 10-K FY2025 and 8-K Q3 FY2026 (release, Aug 6, 2026). Analysis dated 2026-08-06.

Price: $187.62
Intrinsic value (5y, base): $186
Total annual return (5y): 2.5%
Status (nominal): Preserves value
Margin of safety: No margin

The essentials

Biosciences/Diagnostic Solutions spin-off with Waters closed on Feb 9, 2026: BD remains a more focused medical technology company across four segments (Medical Essentials, Connected Care, BioPharma Systems, Interventional)
FY2026 guidance raised on Aug 6, 2026: adjusted diluted earnings per share from US$12.62 to US$12.72, with revenue growth pointing to the high end of the low-single-digit range
Serial acquirer: invested capital carries goodwill from CareFusion, Bard, and Advanced Patient Monitoring, so return on capital comes in below the 10% bar despite healthy normalized operating margins
The FDA consent decree over Alaris infusion pumps (inherited from CareFusion) and the warning letter on the Pyxis system are pending regulatory risks

Source 10-K FY2025 Sep 30, 2025 ·8-K Q3 FY2026 (release, Aug 6, 2026) Aug 06, 2026 ·DEF 14A 2025 (proxy) Dec 18, 2025

Health: Under watch

Price $188 at 2026-09-03 closeMarket Cap $51.6 bnEnterprise Value $67.7 bnNet debt $16.1 bnEV/NOPAT (today) 29.3x

Intrinsic value — two valuation methods

No margin of safety

Price market

$188

DCF value today

$334

+78.2% vs price

Multiples value today

$171

-9.1% vs price

Total return at 5 years: 2.4%/year = -0.2% appreciation + 2.6% dividend. The target price ($186) is ex-dividend; the $24 in dividends collected over 5 years are added separately.

The methods disagree: one places the value today above the price ($188) and the other below.

Pillars of the analysis

The verdict — today vs 5 years

Today — expensive, no margin of safety: at $188 trades ~10.0% above its value discounted to today (~$171); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Preserva valor: the target price ($186) plus dividends yield just enough to preserve nominal capital, below the required 4% floor.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$109.

Thesis

The business

BD is a scale medical technology company, with mostly recurring continuing revenue (disposable supplies) and a moat supported by intellectual property and regulatory barriers, but with a return on capital structurally below the 10% bar because invested capital carries goodwill from decades of acquisitions (CareFusion, Bard, Advanced Patient Monitoring). The Biosciences/Diagnostic Solutions spin-off with Waters, closed in February 2026, leaves a more focused portfolio across four medical technology segments.

The valuation

Valued by sum of the parts: each of the four continuing segments is projected with its share of revenue and a multiple within the medical technology archetype band (+2%), applied to NOPAT at year 5. The base case blended multiple is around 18 times NOPAT, in the middle of the band, reflecting a stable moat and a return on capital below the bar despite moderate growth and expanding margins.

The margin of safety

No margin of safety: at this price capital is preserved, but it is not bought below its value. Today's price compares against the 5-year value derived from the sum of the parts; the estimated total return includes both appreciation and the dividend, which today yields around 2.2% and has been growing steadily.

What to watch

The main disconfirmer is the resolution of the FDA consent decree over the Alaris infusion pumps and of the warning letter on the Pyxis system: a slower or costlier remediation than expected would pressure both operating margin and the company's reputation at a time when it is already absorbing the costs of the Waters separation.

Educational / informational. Does not constitute investment advice.

The valuations

Valuation by multiples

33%

26%

14%

27%

Medical Essentials $19.8 bnConnected Care $15.6 bnBioPharma Systems $8.4 bnInterventional $16.5 bn

Medical Essentials High-volume, recurring medication management and vascular access supplies

NOPAT year 5 $1.2 bn

× EV/NOPAT 17.0x

= EV Medical Essentials $19.8 bn

Connected Care Connected medication administration and patient monitoring devices, reinforced by the Advanced Patient Monitoring acquisition

NOPAT year 5 $0.8 bn

× EV/NOPAT 19.0x

= EV Connected Care $15.6 bn

BioPharma Systems Prefilled injection systems (syringes, pens) sold directly to pharmaceutical companies

NOPAT year 5 $0.4 bn

× EV/NOPAT 21.0x

= EV BioPharma Systems $8.4 bn

Interventional Vascular, urological, and specialty surgical devices, single-use or implanted

NOPAT year 5 $1 bn

× EV/NOPAT 17.0x

= EV Interventional $16.5 bn

Σ EV parts $60.3 bn

+ Excess cash $7.8 bn

− Corporate debt -$16.8 bn

= Equity $51.3 bn

÷ 275 M shares

= Target price / share (5 years) $186

Value today (cash flow discounted at the risk-free rate)

Target price at 5 years $186 · discounted to today at Rf 4.5% $150

+ PV of dividends (5y, year by year) $21

= Value today $171

vs current price $188 -8.9% (value below the price)

Discounted cash flow to present value (DCF)

TTM owner earnings (continuing), cash-generating power at the EV level (pre-interest): NOPAT + D&A − maintenance capex − ΔNWC. It therefore differs from net income (netMargin×revenue, post-interest and post-tax) shown in the Net income row. Amortization of intangibles from past acquisitions (CareFusion, Bard, Advanced Patient Monitoring) is the largest portion of D&A and does not require cash replacement, so actual capex (~2.6% of revenue) is taken entirely as maintenance. as the base. Move the assumptions: the value recalculates live. The verdict remains anchored by multiples; the DCF contrasts it at present value.

Discount rate — risk-free (4.5% floor) effective = 4.5%

Risk-free rate 4.5%

Risk does not inflate the rate: protection is required separately, as a margin of safety over the value. The floor avoids discounting at the pace of a depressed market rate.

Base owner earnings $4 bn

Growth 4.5%

Terminal g 0.0%

Years 5 years

Year	Projected FCF	Discount factor	Present value
1	$4.1 bn	0.957	$4 bn
2	$4.3 bn	0.916	$4 bn
3	$4.5 bn	0.876	$4 bn
4	$4.7 bn	0.839	$4 bn
5	$4.9 bn	0.802	$4 bn

PV of explicit flows (Σ) $19.8 bn

Terminal value = FCF₅₊₁ / (Rf − g) $109.9 bn

PV of terminal value $88.2 bn

= Enterprise value $108.1 bn

− Net debt -$16.1 bn

= Equity $92 bn

÷ 275 M shares

Implied value / share $334

vs current price $188 +78.2% (value above the price)

82% of the DCF value is in the terminal value. Method convention: the terminal is taken with no growth (g = 0) — growth beyond the explicit horizon is not paid for today; what the business achieves afterward is part of the margin, not the price. The perpetuity still dominates and makes the DCF sensitive to the assumptions; that is why the multiples valuation —with an explicit exit multiple— drives the verdict.

Reverse DCF — what growth the price discounts

The inverse approach: instead of projecting growth to obtain the value, the market price ($188) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The price discounts -5.6%/year

Our base case projects +4.5%/year

The market discounts less growth (-5.6%/year) than we project (4.5%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$3 bn of owner earnings in year 5 (vs ~$4.9 bn of our base case). It recalculates if the DCF assumptions are edited.

The model and the scenarios

Year-by-year model

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on NOPAT (EV/NOPAT) — suma de las partes por segmento. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

exit multiple: 3 years 18.5x · 5 years 18.0x onNOPAT (EV/NOPAT) — suma de las partes por segmento

US$ bn	TTM	+1a	+2a	+3a	+4a	+5a
Operation (editable: revenue, margins, capex, D&A)
Revenue	19.19	20.15	21.1	22.05	23	23.92
growth	—	+5%	+5%	+5%	+4%	+4%
OCF	2.8	3.0	3.2	3.4	3.6	3.8
OCF margin	14.6%	15.0%	15.3%	15.6%	15.8%	16.0%
Total capex	0.5	0.53	0.56	0.59	0.62	0.65
Maintenance capex	0.3	0.3	0.3	0.3	0.3	0.3
Growth capex	0.3	0.3	0.3	0.3	0.3	0.3
EBIT	2.9	3.2	3.4	3.7	4.0	4.2
EBIT margin	15.0%	15.8%	16.3%	16.8%	17.2%	17.5%
NOPAT	2.3	2.6	2.8	3.0	3.2	3.4
D&A	2.26	2.2	2.15	2.1	2.05	2
Cash flow (the two versions)
FCF growth (OCF − total capex)	2.3	2.5	2.7	2.8	3.0	3.2
FCF maintenance (OCF − maintenance capex)	2.6	2.8	2.9	3.1	3.3	3.5
Owner earnings (NOPAT + D&A − maintenance capex)	2.0	2.2	2.4	2.6	2.8	3.0
EV and multiples (the accumulated cash lowers EV)
Cash	0.7	1.9	3.3	4.7	6.2	7.8
EV (MktCap − Cash + Debt)	67.7	66.5	65.2	63.7	62.2	60.7
EV / FCF growth	29.4x	26.7x	24.4x	22.4x	20.7x	19.1x
EV / FCF maintenance	26.5x	24.1x	22.1x	20.3x	18.7x	17.3x
EV / Owner earnings	34.6x	30.6x	27.3x	24.5x	22.2x	20.3x
EV / NOPAT	29.3x	26.0x	23.6x	21.5x	19.6x	18.1x
EV / EBIT	23.5x	20.9x	18.9x	17.2x	15.7x	14.5x
EV / Sales	3.5x	3.3x	3.1x	2.9x	2.7x	2.5x
Shareholder return
Dividend / share	$4.20	$4.41	$4.63	$4.86	$5.11	$5.36
Value curve (value/share at exit multiple by year)
Value / share (target price)	—	$118	$136	$156	$172	$187
Total return vs price	—	(-35%)	(-12%)	(-3%)	(+0%)	(+3%)

Valuation · Base · 3 years at 18.5x · 5 years at 18.0x on NOPAT (EV/NOPAT) — suma de las partes por segmento

3 years

$156 -3.4%/year

Target EV (mult × metric) $55 bn

+ Cash − Debt = Equity $42.9 bn

total return (with dividend) -3.4%/year

price appreciation only -6.0%/year

vs current price $188 value below

5 years

$187 +2.5%/year

Target EV (mult × metric) $60.4 bn

+ Cash − Debt = Equity $51.4 bn

total return (with dividend) +2.5%/year

price appreciation only -0.1%/year

vs current price $188 value below

The year-0 (TTM at Jun 30, 2026) is not the raw XBRL TTM: the tagged figure mixes FY2025 (still with the Life Sciences segment, since divested) with recent quarters (already on a continuing basis, ex-Life Sciences), due to the spin-off and combination with Waters closed on Feb 9, 2026. The clean continuing-basis TTM was reconstructed from the levels presented in the Aug 6, 2026 8-K: FY2025 continuing revenue (US$18.544bn, published in the guidance reconciliation) + 9 months FY2026 continuing (US$14.183bn) − 9 months FY2025 continuing restated (US$13.539bn) = US$19.19bn. The prior2/prior1 historicals in Projections remain on the old base (with Life Sciences) because that is the only basis presented for those fiscal years — the discontinuity is declared and not mixed with the clean TTM. The TTM operating margin (15.0%) excludes period restructuring/integration/separation/transaction charges (US$938M in nine months, including US$450M of non-cash impairment) but does include amortization of intangibles from past acquisitions (US$1.113bn in nine months) as a recurring operating expense — that is exactly the role D&A plays in owner earnings, which adds it back. The company is a serial acquirer (CareFusion 2015, Bard 2017, Advanced Patient Monitoring 2024): invested capital carries the accumulated goodwill from those purchases, so accounting ROIC comes in structurally low despite a healthy operation (§3). Sum of the parts across the four continuing segments (Medical Essentials, Connected Care, BioPharma Systems, Interventional): each piece's terminal weight is approximated by its share of nine-month FY2026 revenue (there is no operating income by segment in the release — the limitation is declared) and the multiple by segment reflects its nature (BioPharma Systems, with the GLP-1 tailwind and direct sales to pharmaceutical companies, at the ceiling; Medical Essentials, high-volume supplies exposed to volume-based tenders in China, at the floor). The share count fell from 288.5M (FY25) to 275.2M (TTM) due to an accelerated buyback financed by the US$3,857M cash distribution received in the spin-off —a non-recurring event; the historical FY22-25 count was essentially flat, so the model does not extrapolate a sustained buyback path and instead accumulates the cash surplus (accumulateCash: true).

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (EV falls as cash increases). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

Scenarios (bear / base / bull) — at 5 years

Bear Revenue growth stalls near 2-3% annually (volume-based tender pressure in China and intensified competition in Medical Essentials), operating margin barely holds at ~15% without the expected expansion, and the multiple compresses to 14.5x NOPAT reflecting doubts about the sustainability of a serial acquirer's return on capital. $100

Base Revenue grows ~5% in year 1 (anchored to FY2026 guidance, which points to the high end of 'low-single-digit plus') and decelerates smoothly toward ~4% by year 5; operating margin expands from 15.0% to 17.5% as separation costs dissipate and the BD Excellence program operates. $186

Bull BioPharma Systems accelerates with the GLP-1 therapy rollout and Connected Care with Advanced Patient Monitoring, taking consolidated growth to ~9% in year 1 decelerating to ~8% by year 5; operating margin expands to ~19.4% and the multiple expands to 21x reflecting better-than-expected execution of the BD Excellence program. $319

Value sensitivity

Value per share by growth scenario (rows) and the compression or expansion of the exit multiple (columns). The color shows whether it beats the required return.

Growth ↓ / Multiple →	Compression−15%	Base multiple	Expansion+15%
BearRevenue growth stalls near 2-3% annually (volume-based tender pressure in China and intensified competition in Medical Essentials) · base 14.5x NOPAT — floor of the medical technology band [16,22], compressed below the floor amid stalled growth	$85 -11.0%	$100 -8.5%	$115 -6.2%
BaseRevenue grows ~5% in year 1 (anchored to FY2026 guidance · base Blended multiple ~18x NOPAT, sum of the parts by segment: Medical Essentials and Interventional at 17x, Connected Care at 19x, BioPharma Systems at 21x — within the medical technology band [16,22], in the middle, reflecting a stable moat and return on capital below the 10% bar	$158 -0.6%	$186 2.4% · base case	$214 5.1%
BullBioPharma Systems accelerates with the GLP-1 therapy rollout and Connected Care with Advanced Patient Monitoring · base 21x NOPAT — ceiling of the medical technology band [16,22], justified by higher terminal growth and sustained margin expansion	$271 9.9%	$319 13.3%	$367 16.4%

● exceeds 15% ● exceeds 10% ● falls short of 10%

Multiples — today

P/E 54.9x

EV / owner-FCF 21.1x

EV / EBIT 23.5x

EV / Sales 3.5x

FCF yield 6.2%

High today = growth is being paid for; they cheapen toward 3 and 5 years (see Projections).

Forward multiples

With today's price fixed and the metric growing, what multiple is being paid at 3 and 5 years. Today's high multiple is the price of growth: if the business grows, the entry multiple cheapens on its own.

Optionalities and margin of safety

Optionalities

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

GLP-1 therapies and injectable biologics (BioPharma Systems)

Growing demand for self-administered injectable therapies (GLP-1, biologics) on BD's Vystra platform is not fully reflected in the base path for the smallest segment; faster-than-projected adoption would be upside not paid for today.

Upside

BD Excellence program (cost efficiency)

The operational efficiency program the company has been executing could expand operating margin faster than assumed in the base case once the Waters separation is complete; the base case only assumes moderate expansion.

Upside

Favorable resolution of the Alaris consent decree

If remediation of the Alaris infusion pumps is completed earlier or at lower cost than expected, it would free up management capacity and capital today reserved for regulatory contingencies; not quantifiable with the information available, listed as unquantified upside.

Lottery ticket

Base value (multiples, at 5 years) $186

+ Optionalities (total) $0

= Value with optionalities $186

CAGR with optionalities 2.4%

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Maximum price to pay today — by required return

Each card fixes a required annual return and answers: if the business is worth $186 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $188, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

Return 4%

$174

maximum to pay today

No margin -7.5%

Return 10%

$134

maximum to pay today

No margin -40.2%

Return 15%

$109

maximum to pay today

No margin -72.8%

Return and margin of safety calculator

The maximum price to pay today to earn the required return, with the dividend collected as a separate flow. Both controls are editable.

Target price (in 5 years, ex-dividend) $186

method's base case: $186 · + dividends collected over 5 years $24 → total value to the shareholder $210

Required return 4.5%

risk-free rate (the method's floor): 4.5%

Maximum price

$171

Margin of safety

-10.0%

CAGR at market

2.4%

With a target price of $186 in 5 years plus $24 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $171. Against the current market price ($188), the margin of safety is -10.0% (trades above the maximum → a premium is paid) and the total return at that price would be 2.4% annually.

Synthesis

Valuation quality

Multiple within band. The base case blended multiple (~18x NOPAT) falls in the middle of the medical technology archetype band [16,22].
Growing dividend. Current dividend of US$4.20/share with a long history of sustained annual increases.
TTM contaminated by the spin-off. The raw XBRL TTM mixes FY2025 (with Life Sciences) with recent continuing quarters (ex-Life Sciences); it was reconstructed by levels to avoid overstating the current business.
Return on capital below the bar. The accounting ROIC structurally below 10% weighs on the position within the multiple band, partially offset by growth and the stable moat.

ROIC vs the 10% bar — the compounding engine

5.7%

10.4%

ROIC

on invested capital

CFROIC

backed by cash

value created (above the bar) up to the bar 10% bar (opportunity cost)

The quality bar — return bands

The return on capital is judged against absolute bands; the value-creation floor is the market's opportunity cost (~10%). A stock's volatility does not measure business risk.

Exceptional ≥20%

Excellent 15-20%

Good 10-15%

Below the bar <10%

ROIC 6% → below the 10% bar. The bar is a measure of business quality, not the method's discount rate: value is discounted to today at the risk-free rate, and protection is required separately, as a margin of safety.

Owner earnings — the waterfall

EBIT

$2.9 bn

− Taxes

-$0.6 bn

+ D&A

+$2.3 bn

− Maint. capex

-$0.3 bn

− Δ WC

-$0.1 bn

Owner earnings

$4.2 bn

It charges maintenance capex (which EBITDA does not deduct). The growth capex ($0.3 bn) is voluntary and is not charged to the base — it depresses FCF today, creates value tomorrow.

Cash & reinvestment

FCF yield (owner-FCF / market value) 6.2%

Cash conversion (FCF / earnings) 340%

Reinvestment rate (growth capex / NOPAT) 11%

Intrinsic growth (g = reinv × ROIC) 1%

Capex / D&A 0.2x

Economic profit (CFROIC − WACC) +0.4 pp

Margins — trajectory

Each margin over sales, year by year: historical (solid line) → projection (dotted).

Operating15%

Net10%

FCF / sales21%

Owner earnings — the detail

EBIT $2.9 bn

NOPAT (rate 20%) $2.3 bn

+ D&A $2.3 bn

− Maintenance capex $0.3 bn

− Δ working capital $0.1 bn

= Owner earnings $4.2 bn

Business quality

✕ ROIC exceeds the cost of capital (~10%)
✓ CFROIC backs up the ROIC (183%, cash vs. accruals)
✕ Healthy balance sheet (low corporate debt)
✓ Durable competitive moat (multiple advantages)

Quality — cash · ROIC · reinvestment

Return on capital. Below the 10% bar, dragged down by accumulated goodwill from decades of acquisitions (typical serial-acquirer pattern, §3).
Cash generation. Continuing operating cash flow grew 33.3% in 9M FY2026 versus the prior year, with modest capex (~2.6% of revenue).
Earnings quality. Reported GAAP earnings are depressed by non-recurring restructuring and separation charges; adjusted earnings, which exclude them, grow more steadily.
Reinvestment runway. Modest maintenance capex relative to D&A (dominated by non-cash intangible amortization), with no clear signs of a high-return organic reinvestment runway.

Revenue trajectory

· $19.4

+4% $20.2

+3% $19.2

+5% $20.2

+5% $21.1

+5% $22.1

+4% $23

+4% $23.9

FY24

FY25

TTM

+1A

+2A

+3A

+4A

+5A

Historical CAGR -0% Projected 5y +5% Owner-FCF 5y +3%

Values in US$ bn. The % over each bar is the year-over-year (YoY) growth — each year, historical and projected, vs the prior one (the TTM vs the TTM from a year ago). The path comes from the same source as the table; years without their own series in the model are interpolated between the anchors. Historical solid, projection in a lighter shade.

Where the growth comes from · by segment

Weight in revenue and year-over-year (YoY) growth, in reported USD.

Segment · weight in the mix YoY growth

Medical Essentials +3%

35% of the mix

Connected Care +5%

25% of the mix

BioPharma Systems +4%

12% of the mix

Interventional +7%

29% of the mix

Weights by share of continuing revenue for the nine months ended Jun 30, 2026 (US$14,183M); year-over-year reported growth for each segment over the same period, already on a restated continuing basis (excludes Life Sciences). Interventional and Connected Care are the growth engines; Medical Essentials is the largest but also the most exposed to regulatory pricing pressure.

Growth engine — operating drivers

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Revenue by segment (9M FY2026, continuing)

· $4,9bn

-29% $3,5bn

-51% $1,7bn

FY23

FY24

FY25

Adjusted diluted earnings per share (FY2026 guidance)

· $11,9

+6% $12,6

+1% $12,7

FY23

FY24

FY25

Capital returned to shareholders (cash, 9M FY2026)

· $0,9bn

+157% $2,3bn

FY24

FY25

BD does not report physical units or per-unit pricing at the consolidated level: the relevant operating driver is continuing revenue by segment and its reported/constant-currency growth, together with the company's own guided adjusted earnings per share (the most direct anchor for year 1 of the path, per the guidance raised on Aug 6, 2026). Capital returned to shareholders is separated from operating growth because in 2026 it is distorted by a non-recurring event (the spin-off cash distribution).

Projections

Metric	FY23	FY24	FY25	TTM	+1A	+2A	+3a	+4A	+5a
Revenue	—	$19.4 bn	$20.2 bn (+4%)	$19.2 bn (+3%)	$20.2 bn (+5%)	$21.1 bn (+5%)	$22.1 bn (+5%)	$23 bn (+4%)	$23.9 bn (+4%)
Normalized operating income (EBIT)	—	$2.1 bn	$2.4 bn (+14%)	$2.9 bn	$3.2 bn (+11%)	$3.4 bn (+8%)	$3.7 bn (+8%)	$4 bn (+7%)	$4.2 bn (+6%)
Owner earnings (FCF)	—	$2.1 bn	$3.1 bn (+47%)	$4 bn	$4.1 bn (+3%)	$4.2 bn (+3%)	$4.4 bn (+3%)	$4.5 bn (+2%)	$4.6 bn (+2%)
Net income	—	$1.5 bn	$1.7 bn (+15%)	$2 bn	$2.2 bn (+11%)	$2.4 bn (+10%)	$2.6 bn (+9%)	$2.8 bn (+8%)	$3 bn (+7%)

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

Growth quality

Raised guidance. The company raised the floor of its adjusted earnings-per-share range on Aug 6, 2026 and points to the high end of its revenue growth range.
BioPharma Systems engine. Smallest segment but with the clearest tailwind (GLP-1 therapies), though concentrated among a few large pharmaceutical customers.
Pressure in Medical Essentials. The largest segment grows at the slowest pace in the portfolio, dragged down by regulatory pricing pressure.
Constant-currency growth. FX-neutral growth (4.4% in the quarter) is lower than reported (5.4%), a signal that part of reported growth depends on a currency tailwind that could reverse.

Moat strength

Width

None

Narrow

Wide

Trend

→ Stable

Sources of the moat

Network effect

absent — The business does not exhibit direct network effects: the value for each customer does not increase with the number of other customers using the product.

Cost advantage

partial — Integrated global manufacturing and distribution scale in high-volume disposable supplies, with consolidated distribution centers that reduce per-unit logistics cost.

Intangibles / brand

strong — Portfolio of patents, technology, know-how, and brands that BD describes as material in the aggregate, combined with product-specific regulatory authorizations (FDA 510(k)/PMA) that act as a barrier to entry.

Switching costs

strong — Qualifying an alternative supplier for critical materials can take 3 months to 3 years when it requires clinical trials, which raises switching costs both for BD and for potential entrants in regulated supplies and devices.

Efficient scale

partial — Established presence in regulated distribution channels and long-term relationships with hospitals, wholesalers, and group purchasing programs, though consolidation of those buyers pressures bargaining power in the customer's favor.

The business and its moat

What it does and how it makes money

BD sells medical supplies and devices to hospitals, clinics, laboratories, and pharmaceutical companies, with a mix of high-volume disposables (syringes, catheters, collection tubes) and higher-ticket capital equipment (infusion pumps, automated dispensing systems). The continuing business, now without Biosciences/Diagnostic Solutions, generates about US$19.2bn in annual revenue across four segments: Medical Essentials (medication management and vascular access supplies, ~35% of revenue), Connected Care (connected devices and dispensing software, ~25%), BioPharma Systems (prefilled injection systems sold to pharmaceutical companies, ~12%, with a direct link to GLP-1 therapy rollout), and Interventional (vascular, urological, and surgical devices, ~29%).

Monetization combines direct sales (capital equipment, pharmaceutical wholesalers) with independent distribution in the U.S. The recurrence of disposable supplies gives the business a predictable revenue base, while capital equipment and connected software offer a higher ticket and long-term stickiness with the hospital customer.

Scale and competitive position

BD employs about 72,000 people in 61 countries and operates manufacturing plants in more than a dozen jurisdictions outside the U.S., which gives it global production and distribution scale in a high-volume, low unit-differentiation supplies business. The filing does not quantify BD's own market share or a citable competitor share (§0), but it describes an increasingly complex medical technology market, with competitors of greater financial scale in some segments, non-traditional entrants in diagnostics, and consolidation of both competitors and buyers (group purchasing organizations, integrated health networks) that pressures prices downward.

The recent spin-off reduces BD's consolidated size (from ~US$21.8bn to ~US$19.2bn in continuing revenue) but concentrates the portfolio in four medical technology lines with greater strategic coherence than the prior three-segment structure, which included a life sciences and diagnostics business of a distinct nature.

The moat: why it's costly to compete

BD's moat combines intellectual property (patents, technology, and brands that the company itself describes as material in the aggregate, without any individual asset being material on its own) with regulatory barriers to entry: commercializing its products requires FDA authorization (510(k), PMA) and equivalent agencies, and qualifying an alternative supplier for critical materials can take 3 months to 3 years when it requires clinical trials, which raises switching costs both for BD and for potential entrants.

Added to this is a scale of integrated global manufacturing and distribution, long-term relationships with hospitals, wholesale distributors, and group purchasing programs, and —in some proprietary supplies— sole-supplier positions where BD's patented technology is the source of differentiation, not the other way around.

Moat direction and threats

There is no evidence in the filing of a unit-economics gap that is widening in a measured and consolidated way (§3 Step 1 bis): continuing operating margins have been compressed by transitory separation and restructuring costs, and volume-based tender pressure in China has already unfavorably affected the revenue of certain segments. The moat direction is classified as stable: wide due to the regulatory and intellectual property barriers described, without consolidated evidence of either widening or structural erosion.

The main threats are pricing pressure from payer consolidation and competitive tender programs (including the proposed expansion of the CMS Competitive Bidding Program), pending regulatory uncertainty over the Alaris infusion pumps and the Pyxis dispensing system, and execution of the post-spin-off integration under the BD Excellence program.

Business / sector quality

Revenue recurrence. Majority of high-volume disposable supplies (syringes, catheters, collection tubes), giving demand predictability.
Post-spin-off concentration. The portfolio becomes more focused across four medical technology segments after exiting the life sciences and diagnostics business.
Exposure to volume tenders. Medical Essentials, the largest segment, is directly exposed to volume-based purchasing programs in China and buyer consolidation.
Segment diversification. Four segments with distinct growth and margin dynamics reduce dependence on any single business.

Solvency margin

Each pillar between danger and solid — the further right, the more room.

Leverage (net debt / EBITDA) 3.1x

danger > 3× no debt

Interest coverage (EBIT / int.) 5.0x

danger < 2× solid > 8×

The cushion against the contraction phase of the cycle: the further right each pillar sits, the more room before solvency is compromised.

Net cash position

-$16.1 bn net debt

Gross debt $16.8 bn

vs EBITDA debt 3.1x

Cash + liquid investments − debt. The backstop that supports the balance sheet during the contraction phase of the cycle.

Debt composition

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

$16.8 bn (100%)

Financial debt · structural — to be refinanced

Structural $16.8 bn (100% of total)

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

Company health / solvency

✕Leverage (net debt / EBITDA)Net debt / EBITDA 3.1x
!Interest coverage (EBIT / interest)5.0x
–Liquidity (current ratio)no data
✓Cash quality (CFROIC vs ROIC)CFROIC backs 183% of ROIC
✕Value creation (ROIC − 10% bar)-4pp
✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.2x — no over-investment
!Float / working capitalConsumes cash $0.1 bn (positive WC)
✓Dilution (SBC % of revenue + shares)SBC 1.5% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

Health — balance sheet risks

Net debt. US$16.1bn of net debt against ~US$2.8bn of annualized continuing operating cash flow; manageable but material.
Spin-off distribution. Received US$3,857M in cash from the spun-off entity, used to accelerate buybacks and debt repayment in 2026.
Interest coverage. Interest expense (~US$579M annualized) represents a moderate portion of normalized EBIT (~US$2.9bn).
Short-term liquidity. Cash of US$708M at Jun 30, 2026, relatively low relative to balance sheet size, though offset by recurring operating cash flow.

Who runs it

Thomas E. Polen CEO since January 2020 (previously Chief Operating Officer between October 2018 and January 2020, and President since April 2017); has also chaired the board since April 2021. His entire recent executive career has been within BD.

Thomas E. Polen (CEO and Chairman of the Board)

Skin in the game

BD's ownership structure is dominated by passive institutional investors (Vanguard 11.3%, BlackRock 7.9%, T. Rowe Price 5.6%), with no controlling shareholder or founding family holding a material stake. Directors and executives as a group (23 people) report modest combined ownership per the Dec 2025 DEF 14A proxy, consistent with a century-old company with widely dispersed ownership rather than alignment via significant direct ownership.

Executed the Biosciences/Diagnostic Solutions spin-off with Waters (closed Feb 9, 2026) and the Advanced Patient Monitoring acquisition from Edwards Lifesciences (closed Sept 2024, US$3,914M)
Reorganized the company into four continuing segments effective Oct 1, 2025, coinciding with the launch of the BD Excellence efficiency program
Raised FY2026 adjusted earnings per share guidance on Aug 6, 2026, in the first full quarter as 'New BD' after the spin-off

Capital allocation — indicators

Owner-FCF (shareholder's own cash) $4.2 bn

Reinvested / Dividends / Buybacks 35% / 25% / 35%

Dividend yield (today) 2.2%

Cash conversion (FCF / earnings) 340%

Shares — ownership and dilution

Who owns the shares — the alignment and whether there is a controlling shareholder.

11.3%

7.9%

74.2%

Vanguard Group 11.3%

BlackRock 7.9%

T. Rowe Price 5.6%

Directors and executives (group) 1.0%

Remainder (institutional and retail float) 74.2%

Dilution

Net share dilution (YoY) -4.6%

SBC / market value (dilution rate) 0.5%

Minimal dilution: SBC represents less than 2% of value per year and the share count is ~flat — it does not erode value per share.

Management / capital allocation

Executive continuity. The CEO has led since 2020 with prior internal track record as COO and President, giving strategic continuity to spin-off execution.
Spin-off execution. Completed the Biosciences/Diagnostic Solutions separation with Waters within the announced timeline (closed Feb 9, 2026).
Alignment via direct ownership. No controlling shareholder or material insider ownership; alignment depends on stock-based compensation rather than significant ownership.
Candor on regulatory risks. The filing details the Alaris consent decree and the Pyxis warning letter with reasonable specificity, rather than downplaying them.

Why it is not cheap

Recent spin-off (missing buyers): the Biosciences/Diagnostic Solutions spin-off with Waters only closed on Feb 9, 2026, and the market is still recalibrating the value of 'New BD' on a continuing basis that even the raw XBRL TTM does not cleanly reflect
Restructuring/non-cash impairment (motivated sellers): the US$605M in restructuring charges in 9M FY2026 (including US$450M of non-cash impairment) depress reported GAAP earnings without reflecting an equivalent destruction of economic value
Pending regulatory risk on Alaris/Pyxis: uncertainty over the FDA consent decree and the Pyxis warning letter may be over-discounted relative to what the raised Aug 6, 2026 earnings-per-share guidance suggests

No margin of safety: at this price capital is preserved, but it is not bought below its value. The company raised its adjusted earnings-per-share guidance just weeks ago (Aug 6, 2026), pointing moreover to the high end of its revenue growth range —a signal that the underlying business is performing better than the price, still anchored to the uncertainty of the post-spin-off transition, reflects.

Return asymmetry — risk/reward

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

-8%/year

-36% total

Bear

bad scenario

+2%/year

+13% total

Base

realistic

+13%/year

+87% total

Bull

upside

Even in the bear scenario, the return holds at -8%/year (-36% total): the margin of safety protects the downside. The bull (+13%/year, +87% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

Bear case — disconfirmation

The FDA consent decree on Alaris pumps extends longer than expected, with additional remediation costs and restrictions on marketing new products
Volume-based tender pricing pressure (China) and buyer consolidation deepens in Medical Essentials, compressing the largest segment's margin
The expected benefits of the BD Excellence program fail to materialize at the guided pace, leaving operating margin stalled near the current level
Product liability litigation (ethylene oxide, implants) or a new regulatory event generates additional charges not reflected in current guidance

Bull case — the thesis for

The GLP-1 therapy rollout accelerates demand for BioPharma Systems injection systems faster than projected
The BD Excellence program expands operating margin beyond guidance as post-separation synergies are completed
Advanced Patient Monitoring and the rest of Connected Care sustain low double-digit growth, outperforming the rest of the portfolio
A favorable, faster resolution of the Alaris consent decree frees up management capital and reduces the regulatory tail risk

Risks — what breaks the base case

Regulatory (FDA). The Alaris consent decree and the Pyxis warning letter are tail risks with uncertain cost and timeline.
Pricing pressure. Volume-based tenders in China and buyer consolidation pressure the largest segment (Medical Essentials).
Post-spin-off execution. The operational and accounting transition to 'New BD' adds complexity and non-recurring costs through 2026-2027.
Product liability litigation. Ethylene oxide, hernia repair implants, vena cava filters, and implantable ports generate recurring legal exposure.
Supply chain and tariffs. Dependence on single-source suppliers for certain critical materials, with qualification times of up to 3 years for an alternative supplier.

The business

The valuation

The margin of safety

What to watch

What it does and how it makes money

Scale and competitive position

The moat: why it's costly to compete

Moat direction and threats

Other companies of the same type