Medical technology company Becton, Dickinson and Company (BDX) has commented on the impact of the devastating Japan quake on its operations in that country. The New Jersey-based company stated that all of its employees in Japan are safe and its Tokyo office is undamaged.
Becton’s Japanese operations are led by its subsidiary Nippon Becton Dickinson Company, located in Tokyo, and a manufacturing and distribution facility in Fukushima. The company has temporality closed its manufacturing plant and distribution center in Fukushima prefecture while it assesses damage there.
Becton is actively working with various non-profit disaster relief and humanitarian aid organizations, including American Red Cross and U.S. Fund for UNICEF, to assess Japan’s need for healthcare products. The company has donated $325,000 as part of its relief efforts for victims of the disaster, which will be distributed among relief organizations.
Becton is a world leader in safety needle products. The company faces a wide range of competitors, including Baxter International (BAX), in each of its three business segments. Becton enjoys growing international sales and maintains a focus on geographical expansion into overseas markets, in particular, emerging markets, which account for over 20% of its sales. Japan contributed roughly 5% of its total sales in fiscal 2010.
We remain cautious about Becton due to the lack of any major short-term catalyst. The rising demand for safety-needle was the primary driver of the company’s growth in the past, which is not expected to continue, given that the U.S. market is mostly penetrated. Nevertheless, Becton anticipates that future sales will be driven by strong demand for its next-generation safety pen needles, which is expected to be launched in second-half fiscal 2011.
We are optimistic that growth may recover in the future with the European Union adoption of safety needle requirements and recovery in research markets. Becton’s preeminent global healthcare products franchise remains partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field. Our Neutral recommendation on the stock is supported by a short-term Zacks #3 Rank (Hold).
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