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Leading medical devices maker C.R. Bard (BCR) is slated to announce its third-quarter 2011 results after the closing bell on Tuesday, October 25. The New Jersey-based company expects its sales for the quarter to grow 4%-6% in constant currency, assuming sustained weakness in the U.S. Moreover, it expects an adjusted earnings in the range of $1.57 to $1.61 a share. The current Zacks Consensus Estimate for revenues and earnings for the third quarter are $725 million and $1.60 a share, respectively.

Second Quarter Recap

C.R. Bard’s second quarter adjusted earnings of $1.57 a share met the Zacks Consensus Estimate. However, the company posted a loss on a reported basis, hit by a lumpsum legal charge associated with the settlement of lawsuits related to its hernia repair product.

Revenues rose 7.6% year over year to $725 million, but missed the Zacks Consensus Estimate. Sales were boosted by growth across the board with the company’s Vascular business leading from the front. While the company registered healthy sales in overseas markets, its U.S. revenues were hamstrung by softness across several product lines.

The Vascular segment had yet another strong quarter with revenues having grown at a double-digit clip, buoyed by the SenoRx acquisition. Oncology sales climbed 8% in the quarter on the back of growth across peripherally inserted central catheter/PICC, ports and dialysis catheter businesses. Urology sales inched up 2% while revenues from the Surgical Specialties business rose 4%.

Estimate Revisions Trend

Agreement

Estimates for the September quarter demonstrate an absolute lack of movements over the past week with none out of the 22 analysts covering the stock making any revision in either direction. However, there have been a couple of negative revisions over the past month with no reverse movements.

For fiscal 2011, there was a solitary (out of 21 analysts) downward movement over the past 7 days. However, there were no positive revisions. Over the past 30 days, 2 analysts have lowered theirs forecasts for the fiscal with none moving in the opposite direction.

Magnitude

Estimates for the third quarter have been stationary over the past week and month. For fiscal 2011, estimates have remained static over the past 7 days, but have moved down by a penny over the last 30 days. The current Zacks Consensus Estimate for fiscal 2011 is $6.37, representing an estimated year-over-year growth of 13.83%.

Our Take

C.R. Bard’s well-diversified end-markets and vast product portfolio insulate it from fluctuations in any single therapeutic category. The company’s resource depth and focused innovation are its major competitive advantages. C.R. Bard is also making prudent use of cash in the form of acquisitions and share repurchases.

The SenoRx acquisition has expanded the company’s product portfolio beyond its existing product range meant for ultrasound imaging. SenoRx is expected to continue to drive the top line in the September quarter.

C.R. Bard’s incremental R&D investment should boost its pipeline and give way to product innovation/differentiation. As done in the past, the company is expected to provide a detailed picture on the progress in its pipeline (including new product launches) in the third quarter call.

We expect new product flow and sales force consolidation to drive organic revenues growth and help C.R. Bard to meet its sales objective. The newly launched Ventralex ST umbilical hernia repair product, Ventrio ST ventral hernia repair system and the Echo PS mesh positioning system should support growth moving ahead.

However, heightened competition and pricing/procedure volume pressure remain areas of concern. C.R. Bard faces a mix of competitors ranging from large manufacturers with multiple business lines like Boston Scientific (BSX) and Johnson & Johnson (JNJ) to smaller manufacturers that offer a limited selection of products like Angiodynamics (ANGO).

Moreover, a soft U.S. market may weigh on the company’s third quarter results. Our Neutral rating on the stock is in tandem with a short-term Zacks #3 Rank (Hold).

Source: C.R. Bard: Earnings Preview