Shares of Becton Dickinson (NYSE:BDX) climbed after its updated Alaris Infusion System received 510(k) clearance from the U.S. Food and Drug Administration, allowing it to return to full commercial operations. Alaris was previously restricted in the U.S. except for under medical necessity, and the change is seen as a positive catalyst for shares.
"Now that we have FDA clearance, we are eager to return to full commercial operations with an enhanced and updated Alaris System that we believe is the most comprehensive and innovative infusion solution on the market. The updated Alaris System addresses all open recalls, with the latest hardware, a new version of software, and important cybersecurity updates,” said, Tom Polen, chairman, CEO and president of Becton Dickinson.
KeyBanc equity analysts see the clearance as an important catalyst toward achieving or exceeding 2025 financial targets. They also think the good news will support a potential breakout in shares after five years of being range-bound.
“BDX management had not provided an expected timeline toward FDA clearance, but we believe it's likely ahead of investor expectations, which we gauged as more towards the end of calendar year 2023,” they said.
The analysts added, “Most importantly, we have increased confidence BDX could achieve the '+' in its 5.5%+ revenue CAGR through FY25 and its 25% operating margin target. BDX has previously disclosed annual U.S. infusion pump hardware sales of around $400M prior to FDA restrictions. We believe it generated ~$200M of revenue in FY20, ~$100M annually FY21-FY23, and is positioned for a multi-year replacement cycle that does not appear to be fully captured in forward estimates yet.”
Shares of Becton Dickinson climbed over 6.5% following the update, hitting a record high near $287.