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¹À ̄·¬ ̄¼ȵʦȱȯȱȯȯȰʨȲȳ 4. 4/,3 @ ) ! ! ' '' # # B !,3 @ # !! # 15 @ "#*56$%&'()* ! ;F) - " # ! ! " ! %;F) # # )*B )5 ! ! % 2 # 45 ,3 )3 .! ! "# !" " ! 4.. 4B1 < # ( #& ! >(2 G +2 #!! # 0 #% ) 2 )- # .0 !& );A)1 6 3, @ ! #D))1 & );H) ! # : ! $%&'()* " ! H # >( " & # I ( # #! )5 .5 #;F 3, # ! )10 & # ,3 ! 47 5 8 I # - # # ! 15 )5 2 #! ;F) "# ! # ! " ) "# #$ I > # 3 ! - # # ! # ' 7$ 8 ;G ($> ; # "# ! # #I "# "< "+" I ,- ! 4)$F)>'-( # 2 Risk Reward – Becton Dickinson (BDX.N) $262.00 Our price target of $262 for BDX is based on a ~16x multiple off of our base case CY21e EBITDA, largely in line with large cap peers. Organic growth sustainability emerges in line with long term plan during FY21 as new products ramp (that partially offset China & pump noise prior to stabilization), and cost programs gain traction. Bard synergies and integration are on track. Durability of COVID testing in focus. Morgan Stanley Estimates Mean Consensus Price Target Distribution $255.00 $300.00 Source: Thomson Reuters, Morgan Stanley Research MS Rating ▪ Sustainability of growth pro fi le & potential for 5%+ long-term growth ▪ As we head into the last year of the deal model, Bard remains a meaningful driver of margin improvement, and a lever for growth acceleration supported by EM penetration ▪ More aggressive action on costs may accelerate gains (Project Recode) ▪ Positive offsets (testing and vaccines to a lesser extent) in addition to relative COVID- 19 resilience Consensus Rating Distribution 65% Overweight 35% Equal-weight 0% Underweight Source: Thomson Reuters, Morgan Stanley Research Risk Reward Themes Regulation: Positive View descriptions of Risk Rewards Themes, here $298.00 ~17.5x Bull Case CY21e EBITDA COVID recovery and offsets exceed expectations. Better pipeline execution drives organic sales acceleration while Bard drives additional growth in the high single digits. BD delivers synergies materially above forecasts and ahead of schedule. Capital deployment drives upside. $262.00 16x Base Case CY21e EBITDA Organic growth sustainability becomes more evident as new products ramp, and cost programs gain traction. Bard synergies and integration are on track. The BD/Bard deal model drives mid-teens underlying EPS growth. $188.00 13x Bear Case CY21e EBITDA COVID impact greater than expected; time to recovery slower. Durability of testing shorter. Pump issues remain unresolved beyond expected timelines. Poor execution on cost initiatives and additional price pressures limit margin expansion. Becton Dickinson: Path Less Clear, but Relatively Resilient PRICE TARGET MS PT $275.31 RISK REWARD CHART AND OPTIONS IMPLIED PROBABILITIES (12M) Key: Historical Stock Performance Current Stock Price Price Target Source: Thomson Reuters, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull, Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 05 Nov, 2020. All fi gures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either three-months’ or one-years’ time. View explanation of Options Probabilities methodology, here $234.65 $234.65 $234.65 $298.00 $298.00 (+27.00%) (+27.00%) $298.00 (+27.00%) Prob (>298.00)~15.6% Prob (>298.00)~15.6% Prob (>298.00)~15.6% $188.00 $188.00 (-19.88%) (-19.88%) $188.00 (-19.88%) Prob (<188.00)~23.7% Prob (<188.00)~23.7% Prob (<188.00)~23.7% $262.00 $262.00 (+11.66%) (+11.66%) $262.00 (+11.66%) Prob (> Prob (> 262.00) 262.00) ~33.6% ~33.6% Prob (> 262.00) ~33.6% NOV '19 MAY '20 NOV '20 NOV '21 0 100 200 300 400 USD EQUAL-WEIGHT THESIS BULL CASE BASE CASE BEAR CASE 3 Risk Reward – Becton Dickinson (BDX.N) Drivers 2019 2020e 2021e 2022e Organic Growth (%) 5.1 (0.0) 12.5 (0.6) Gross Margin (%) 56.1 54.5 57.9 57.4 Operating Margin (%) 25.3 23.2 25.8 26.2 EPS ($) 11.69 10.18 12.66 12.97 4/5 BEST 24 Month Horizon 4/5 MOST 3 Month Horizon Key product launches / ramps EM represents around ~15% of sales but may drive up to 1/3 of growth and accelerating pro fi tability. Double digit growth is likely required to exceed guidance Bard synergies could drive meaningful growth acceleration 0-10% APAC, ex Japan, Mainland China and India 0-10% India 0-10% Japan 0-10% Latin America 0-10% MEA 0-10% Mainland China 0-10% UK 10-20% Europe ex UK 50-60% North America Source: Morgan Stanley Research Estimate View explanation of regional hierarchies, here Source: Thomson Reuters, FactSet, Morgan Stanley Research; 1 is the highest favored Quintile and 5 is the least favored Quintile Inst. Owners, % Active 66.7% HF Sector Long/Short Ratio 2.3x HF Sector Net Exposure 17.1% Thomson Reuters; MSPB Content. Includes certain hedge fund exposures held with MSPB. Information may be inconsistent with or may not re fle ct broader market trends. Long/Short Ratio = Long Exposure / Short exposure. Sector % of Total Net Exposure = (For a particular sector: Long Exposure - Short Exposure) / (Across all sectors: Long Exposure – Short Exposure). FDA resolution of Alaris resulting in positive impact on results Positive BTK updates Durability of testing exceeds expectations Synergy realization greater and ahead of schedule Integration lags and promised synergies fail to materialize Prolonged FDA process w. no resolution in sight Competitive pressures in EM mount New product launches trail expectations COVID impact exceeds expectation Morgan Stanley Estimates Mean Source: Thomson Reuters, Morgan Stanley Research FY Sep 2020e Sales / Revenue ($, mm) 16,763 17,117 EBIT ($, mm) 3,767 3,979 EPS ($) 9.80 10.18 Net income ($, mm) 2,762 2,879 KEY EARNINGS INPUTS INVESTMENT DRIVERS GLOBAL REVENUE EXPOSURE MS ALPHA MODELS RISKS TO PT/RATING RISKS TO UPSIDE RISKS TO DOWNSIDE OWNERSHIP POSITIONING MS ESTIMATES VS. CONSENSUS 16,816 3,888 9.93 2,801 4 !"" "# ! "# $ $$ $ % &' $ ($ ( $ $ !"" 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