Q: What gives with my Becton, Dickinson and Co. shares? I thought that its products were always needed. - BR, via the Internet

A: The world's largest manufacturer and distributor of surgical products makes items that are health-care staples.

Its surgical products include needles, syringes and disposal units. It also makes diagnostic instruments and systems used to study cells.

The firm also derives economies of scale from its global manufacturing plants.

Net income for its fiscal fourth quarter, ended September 30, rose nine percent on stronger overseas sales and higher revenue from each of its main segments.

It derives more than half of its profits from overseas sales, which can also be a problem. The stronger US dollar is expected to weigh on its results, which means the firm must improve its operating margins to offset that drag.

Oil prices have fallen, but the price of oil-based resins used to make syringes, plastic dishes and other items remains a variable. In the past, it has had some difficulty passing along price increases.

Shares of Becton Dickinson (BDX) are down 18 percent this year following last year's 19 percent increase and a 17 percent increase in 2006.

The company has a healthy balance sheet with lots of cash, which it uses regularly to raise its dividend, repurchase shares, finance acquisitions and make capital expenditures.

Boasting a long history of smart management, Becton Dickinson underwent several changes at the top recently that are not expected to alter its direction.

Vincent Forlenza, with the firm since 1980, becomes president in January.

He takes over that responsibility from Edward Ludwig, who remains chairman and chief executive. David Elkins, who was with AstraZeneca plc., arrived at the firm this month as chief financial officer.

The consensus rating among Wall Street analysts on Becton Dickinson shares is between "buy" and "hold", according to Thomson Financial.

It consists of three "strong buys", two "buys" and five "holds".

The medical field has its risks. For example, the company was less than successful in its blood glucose monitor business and exited it.

It is also a defendant in several class-action cases related to injuries incurred while using its products.

Earnings are expected to increase nine percent in the fiscal year ending in September 2009 and 11 percent the following fiscal year.

The forecast of five-year annualised growth rate is 13 percent, versus 14 percent expected for the medical instruments and supplies industry.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N Central Ave., Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com

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