Healthcare stocks can be havens in rocky times. That’s why investors are piling into defensive stocks such as medical devices maker C.R. Bard (BCR)
, despite a pricey 23 P/E and tiny 0.76 percent yield.
Yet even Bard isn’t immune to recessions. The New Jersey company makes medical, surgical and diagnostic devices. Its target market is hospitals, which have cut back on equipment spending. Elective medical procedure demand also has weakened. S&P analysts note, however, that Bard also offers many product categories that are historically recession-resistant. One example is vascular devices, which composed 28 percent of the company’s 2010 sales.
Bard keeps racking up sales gains. Second-quarter sales jumped 8 percent to $725 million versus $673.9 million a year ago. Internationally, they surged 17 percent compared to only 3 percent in the United States.
One prime driver is acquisitions. Bard gobbled up healthcare equipment companies in 2006 and 2008. These strategic investments “have produced our strongest international sales quarter in quite some time,” explains Bard CEO Timothy Ring. This month, the company bought Irish vascular medical device maker ClearStream.
A lofty stock price isn’t helping. Of the 22 analysts followed by Thomson/First Call, three have strong buy recommendations, with 17 holds and two underperforms.
Goldman Sachs analysts have downgraded the stock from neutral to sell, citing competitive pricing pressures on key medical products like endovascular and soft-tissue repair segments. The company reports next on Oct. 20.
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