Here's Why You Should Retain Boston Scientific (BSX) Now
Boston Scientific Corporation BSX is well poised for growth in coming quarters, backed by impressive value-added acquisitions. New strategic investments to drive electrophysiology are boosting investors’ optimism. However, unfavorable currency movements and stiff competition are a concern.
In the past year, this Zacks Rank #3 (Hold) stock has gained 8.2% against a 41.4% fall of the industry and an 13.3% decline of the S&P 500.
The renowned manufacturer of medical devices and products has a market capitalization of $69.3 billion. The company’s long-term projected growth of 11.2% compares with the industry’s growth projection of 14.6%.
Let’s delve deeper.
Factors At Play
Impressive Value-Adding Acquisitions: We are impressed with Boston Scientific’s several recent acquisitions that have added numerous products (though many are under development) with immense potential. This, in turn, should help boost the top line in the long term.
In Feb 2022, Boston Scientific purchased Baylis Medical Company. The Baylis integration continues to go well with the differentiated Transseptal access and it remains on track to achieve its full-year expectations. In the fourth quarter, sales from the acquisition of Baylis contributed 160 basis points to Boston Scientific’s top line.
New Strategic Investments to Drive Electrophysiology: We are looking forward to Boston Scientific’s acquisition of Farapulse, a leader in pulsed field ablation, an emerging field that has the potential to improve safety, efficacy, and ease of use for cardiac ablation procedures. This acquisition complements Boston Scientific’s electrophysiology portfolio and will incorporate the FARAPULSE Pulsed Field Ablation (PFA) System. In its fourth-quarter earnings call, the company noted that the early Farapulse launch has been progressing in Europe, as physicians remain enthusiastic about this technology’s safety and ease.
During the fourth quarter, the company’s EP sales were up 25% organically year over year, led by the strength and differentiation of Boston Scientific’s portfolio. The results also include a full-quarter contribution from FARAPULSE. Physician demand for POLARx in Japan and FARAPULSE and POLARx in Europe remained strong in the quarter.
Long-Term Growth Goals Look Impressive: The company aims to improve its clinical and economic outcomes, sustaining category leadership in served markets and expanding into high-growth, adjacent markets. The plan focuses on spaces like category leadership strategy, product diversification into faster-growth markets and expansion of portfolio and capabilities across geographies.
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In 2022, Boston Scientific announced a change in its leadership structure to enhance customer focus and further enable our strategies. According to the company, this new structure supports agile business practices and drives collaboration and innovation across its similar call points.
Exposure to Currency Movement: With Boston Scientific recording 47% of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the last few quarters, as in the case of other important MedTech players too.
Competitive Landscape: The presence of many players has made the medical devices market highly competitive. The company participates in several markets, including Cardiovascular, CRM, Endosurgery and Neuromodulation, where it faces competition from large, well-capitalized companies such as Johnson & Johnson, Abbott, Medtronic, Stryker, Smith & Nephew and Edwards Lifesciences, apart from several other smaller companies.
The Zacks Consensus Estimate for Boston Scientific’s 2023 earnings is pegged at $1.91 per share, indicating an 11.7% increase from the 2022 reported number.
The Zacks Consensus Estimate for 2023 revenues is pegged at $13.47 billion, suggesting a 6.2% rise from the 2022 figure.
A few better-ranked stocks in the overall healthcare sector include Haemonetics Corporation HAE, TerrAscend Corp. TRSSF and Akerna Corp. KERN. Haemonetics and TerrAscend both sport a Zacks Rank #1, while Akerna carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 42.1% in the past year. Earnings Estimates for Haemonetics have increased from $2.87 per share to 2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it reported an earnings surprise of 7.59%.
Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.
TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.
Akerna’s stock declined 95.7% in the past year. Its estimates for 2023 have remained constant at a loss of $1.91 per share over the past 30 days.
Akerna missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 15.49%, on average. In the last reported quarter, KERN delivered a negative earnings surprise of 13.33%.
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