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Analyst Blog

On Mar 04, 2014, we issued an updated research report on Boston Scientific Corporation (BSX - Analyst Report), a leading medical devices company. Despite challenging economic conditions, competitive environment, pressure on core segments and a larger-than-expected currency headwind, Boston Scientific managed to post healthy fourth-quarter 2013 results handily beating both revenues and earnings. 

We are also optimistic about the recent update on the company’s growth objective and its 2014 restructuring plan announced last October that convey significant new additions. The stock currently carries a Zacks Rank #3 (Hold).

Boston Scientific’s fourth-quarter 2013 adjusted EPS of 21 cents beat the year-ago figure by 16.7% and also exceeded the company’s guided range. The bottom line also exceeded the Zacks Consensus Estimate by a couple of cents. Revenues went up 5% at CER to $1.838 billion, ahead of the Zacks Consensus Estimate of $1.829 billion as well as the guided range of $1.780−$1.830 billion.

However, for quite a long time, the US defibrillator and stent markets have remained as major overhangs. Despite several initiatives undertaken by the company to revive its top line, we remain cautious as its core segments –­ Cardiac Rhythm Management (CRM) and Drug-Eluting Stent (DES) (contributing a total of 43% of sales in 2013) – are still taking a toll on the numbers. According to the company, the challenging scenario at present fails to betray any assurance that the size of the CRM and DES markets will increase above existing levels or that the company will be able to increase its market share or net sales in these segments in the near term.

Meanwhile, Boston Scientific is resorting to all available means in order to return to growth. To revive its top line, the company is focusing on strategic initiatives to drive growth and profitability. The company has a strong pipeline of products under development, the launch of which should boost the top line. We are encouraged by the focus on emerging markets, especially India and China. Boston Scientific plans to invest approximately $150 million in China over the next 5 years to build a local manufacturing operation.

Other Stocks to Consider

Some better-ranked medical devices stocks that are worth a look include Covidien plc (COV - Analyst Report), NuVasive, Inc. (NUVA - Snapshot Report) and Stryker Corporation (SYK - Analyst Report). All of these three stocks carry a Zacks Rank #2 (Buy).

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