Embecta Corp

Embecta makes the pen needles, syringes, and safety injection devices for diabetics. It is the global market leader in pen needles — the disposable tips that screw onto insulin pens — with 30+ percent share. Spun off from Becton Dickinson (BDX) in 2022 with about 1.6 billion USD of debt to bring back to BDX as part of the separation, Embecta has been a deleveraging story ever since.

The market hates Embecta because of one thing: Ozempic and GLP-1 drugs. As more diabetics shift from insulin therapy to weekly GLP-1 injections, demand for daily pen needles is theoretically threatened. The market has compressed EMBC to a 1.5x forward P/E and a 14.6 percent dividend yield — pricing in either a complete collapse or near-term equity wipeout. Reality is more nuanced: Type 1 diabetics still need daily insulin (GLP-1s do not replace insulin), and Type 2 diabetics on insulin do not all switch to GLP-1 immediately.

Vanguard and BlackRock are passive holders. No major activist. Some deep-value funds added during the 2024 selloff. Insider buying has been modest.

At 3.14 USD with 1.89 USD EPS the trailing P/E is 1.66 and forward P/E 1.56 — extreme. P/B is negative due to spinoff debt structure. EV/EBITDA 4.1 is half the medical-supplies sector median. The market is pricing in either a 50 percent EBITDA decline or a dividend cut. If neither happens, the stock doubles or triples on re-rate.

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EMBC is a special-situation deep-value bet on the proposition that GLP-1 fear is overstated and the dividend is sustainable. Forward P/E 1.56 is the lowest in medical devices. The risk is dividend cut and continued GLP-1 erosion; the reward is multiple expansion plus dividend income. I would size 0.5 to 1 percent in a special-situations sleeve — small because of the binary dividend risk. The 14.6 percent yield only matters if you believe it survives.