Becton, Dickinson: Alaris Clearance Important Milestone in Regaining Investor Confidence

We are maintaining our fair value estimate for Becton, Dickinson BDX following the U.S. Food and Drug Administration’s clearance of the company’s Alaris Infusion System. Our narrow moat rating is unchanged as well.

The clearance announcement is ahead of our estimated conservative timeline of 2024, but the company still has work to do to preserve its position in the infusion pump market. Alaris has been off the market for more than three years, and while BD didn’t see its market share collapse, it will take more than a year to get the sales close to prerecall levels, in our view. Competitors did see a moderate level of success with their platforms, but Alaris retained most of its installations, and with BD cleared to fully resume its sales activities, we don’t anticipate further damage to the franchise. While we are bringing forward Alaris revenue by a year, this announcement doesn’t have a material impact on our valuation model. However, the impact on investor sentiment is positive, as evidenced by the share price rising materially following the announcement.