Becton, Dickinson and Co (BDX) has announced that the U.S. Department of Health and Human Services (HHS) will purchase 2,000 of its BD Veritor Plus Systems and 750,000 SARS-CoV-2 antigen test kits for Covid-19 detection.
“The BD Veritor Plus System for rapid detection of SARS-CoV-2 is the latest point-of-care testing advance that will significantly expand testing in distributed locations for the benefit of all Americans,” said Admiral Brett P. Giroir, assistant secretary for Health and COVID-19 testing coordinator. “This development will help identify community spread of the virus by further enabling rapid diagnosis of COVID-19.”
BD began shipping limited quantities of its BD Veritor Plus SARS-CoV-2 antigen test kits to distributors last week as it ramps up production capacity. BD is leveraging its global manufacturing network and scale and expects to increase capacity to be able to produce 2 million tests per week by the end of September. The company expects to produce up to 10 million tests from July through September.
Earlier this month, the U.S. Food and Drug Administration (FDA) granted BD an Emergency Use Authorization (EUA) for the system. Clinical studies performed at more than 20 sites across the U.S. demonstrated that the test is capable of achieving 84% sensitivity and 100% specificity, which is in line with the performance from similar immunoassay tests.
Similar to all immunoassay tests, FDA recommends that negative test results be confirmed by a molecular method to confirm the result, if necessary, for patient management.
Shares in BDX are currently trading down 3% year-to-date, and analysts have a cautiously optimistic take on the stock’s outlook with a Moderate Buy consensus. Meanwhile the average analyst price target of $276 indicates 5% upside potential lies ahead. (See BDX stock analysis on TipRanks).
Wells Fargo analyst Larry Biegelson recently reiterated his buy rating on the stock, citing the Covid-19 antigen tests. If BDX managed to sell 2 million tests/ week at an average price of $18, this would generate a further $470 million in revenue per quarter, calculates Biegelson. As this is not yet included in his model, it represents potential upside to estimates going forward, the analyst noted.