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BD Diagnostics, a unit of Becton, Dickinson and Company (BDX - Analyst Report), recently announced that it has received the green signal from the U.S. Food and Drug Administration (FDA) for nasopharyngeal wash, aspirate and swab in transport media specimens on the BD Veritor System for Rapid Detection of Flu A+B.

Becton’s latest offering for Rapid Detection of Flu A+B will be marketed as a laboratory kit to test fluid specimens procured from nasopharyngeal wash, aspirate or swab in transport media. BD Veritor System omits the subjective result interpretation by offering easily observable, digitized objective results. It is the only FDA approved diagnostic flu test against the high-sensitivity standards.

The FDA approval marks another addition to the company’s diagnostic systems offerings. BD Diagnostics recorded revenues of $642 million (32% of total revenues), up 1.7% year over year, in the third quarter of fiscal 2012. Under BD Diagnostics, diagnostic systems sales were up 2.6% to $308.8 million. However, the company has been facing faint, unsubstantial 'flu seasons.

With the FDA clearance of the new influenza test, Becton has expanded its BD Diagnostics portfolio. The company also plans to launch molecular technology product BD Viper Trich in the European Union in the current quarter. However, the U.S. launch of the product is not expected before the fourth quarter of fiscal 2013.

We also note Becton’s commentary on its BD Diagnostics pipeline and product launches expected in fiscal 2013. These include BD Max C. Diff, BD Viper LT with GC/CT and BD SurePath Plus among others. Management believes that the company’s pipeline is the most flourishing in recent times.

While we derive comfort from Becton’s focus on aggressive portfolio extension, we remain cautious due to lack of any major short-term catalyst. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth, which is not expected to continue, given that the U.S. market is already largely penetrated.

On the positive side, Becton’s preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field. However, the company faces a wide range of competitors, including Baxter International (BAX - Analyst Report) in certain niches, in each of its three business segments.

We currently have a long-term “Neutral” recommendation on Becton. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

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