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BD's (BDX) $65M Investment to Boost Supply-Chain Strength

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Zacks Equity Research
·3 min read
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Becton, Dickinson and Company BDX, popularly known as BD, recently announced its plan to invest $65 million in building a state-of-the-art facility in Tucson, AZ. This facility will become the company's supply-chain hub and serve as its final-stage manufacturing and sterilization center.

This announcement should boost BD’s integrated supply chain, thereby strengthening its Medical segment.

More on the News

The new 120,000 square-foot facility is expected to be operational in mid-2022. According to Sun Corridor, Inc., BD’s investment is estimated to have a $122-million economic impact over the next 10 years.

In response to COVID-led public health crisis, BD is investing largely in its in-house capacity for manufacturing and sterilization. This facility will accelerate BD's objectives of an overall operational efficiency, enhanced levels of customer service and its supply-chain strength. In fact, this breakthrough project will become integral to the U.S. medical device supply chain and broaden BD’s already established presence in Arizona, which comprises a $1-billion BD Peripheral Intervention business unit headquartered in Tempe.

Notably, Tucson is a strategic site as it is centrally located between BD's eight U.S. major manufacturing plants and three distribution centers.

This facility will emerge as one of the first in the world to be equipped with an original design and have the ability to meet or surpass the most rigorous environmental guidelines as well as become a model for other sites, globally.

Market Prospects

Per a Fortune Business Insights report, the global medical devices market was valued at $425.5 billion in 2018 and is anticipated to reach a worth of $612.7 billion by 2025, seeing a CAGR of 5.4% during the forecast period of 2018 to 2025. Hence, this development seems well-timed.

Another Notable Development

In December 2020, BD announced its decision to invest $1.2 billion in expanding and enhancing its manufacturing capacity as well as technology for pre-fillable syringes (PFS) plus advanced drug delivery systems (ADDS) over the coming four years. The extension and upgrade will take place throughout the company’s six global manufacturing locations along with the addition of a manufacturing facility in Europe. Apart from broadening its geographical footprint, the company is likely to strengthen its BD Medical segment with the upgrade.

Price Performance

Shares of this currently Zacks Rank #3 (Hold) company have gained 3.2% in a year’s time compared with the industry’s rally of 41.8%.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Align Technology ALGN, Surmodics SRDX and Veeva Systems VEEV. While Align Technology and Surmodics currently sport a Zacks Rank #1 (Strong Buy), the other one presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has a projected long-term earnings growth rate of 19%.

Surmodics has a projected long-term earnings growth rate of 10%.

Veeva has an estimated long-term earnings growth rate of 14.5%.

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Becton, Dickinson and Company (BDX) : Free Stock Analysis Report

Surmodics, Inc. (SRDX) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

Veeva Systems Inc. (VEEV) : Free Stock Analysis Report

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