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Boston Scientific (BSX) Down 2.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Boston Scientific (BSX - Free Report) . Shares have lost about 2.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Boston Scientific due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Boston Scientific Sees Disappointing Q4 Sales Across Core Segments
Boston Scientific posted adjusted earnings per share of 23 cents for the fourth quarter of 2020, which marked a 50% plunge from the year-ago figure. The figure also lagged the Zacks Consensus Estimate by 25.8%. The reported quarter’s adjustments include certain amortization expenses, acquisition/divestitures-related net charges and net investment impairment charges among others.
Reported earnings in the fourth quarter were 10 cents per share compared with the year-ago earnings per share of $2.83.
The company also registered sequential decline of 37.8%.
Full-year adjusted earnings per share was 96 cents, reflecting a 39.2% decline from 2019. It also missed the Zacks Consensus Estimate by 8.6%.
Revenues of $2.71 billion in the fourth quarter declined 6.8% year over year on a reported basis, down 8.3% on an operational basis (at constant exchange rate or CER). Revenues declined 8% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line, however, managed to remain in line with the Zacks Consensus Estimate.
Boston Scientific reported revenues of $9.91 billion for full-year 2020, down 7.7% on a reported basis, 7.8% on an operational basis and 11.3% on an organic basis. The top line missed the Zacks Consensus Estimate by 0.6%.
The company noted 370 basis pointsnegative impact on organic sales growth associated with the conversion of the U.S. WATCHMAN customers to a consignment inventory model and transition to the next-generation WATCHMAN FLX Left Atrial Appendage Closure (LAAC) Device.
Q4 Revenues in Detail
In the fourth quarter, revenues declined 9.2% in the United States on a reported basis (same operationally). Revenues were down 1.1% in the Europe, Middle East and Africa region (down 5.9%); 1.1% in the Asia Pacific zone (down 5.6%); 10.5% in Latin America and Canada (down 3.2%) and 9.9% in emerging markets (down 8.9%).
Segmental Analysis
Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro plus MedSurg.
The company generates maximum revenues from Cardiovascular. Sales from its sub segments, namely Interventional Cardiology and Peripheral Interventions were $585 million (down 23.4% year over year organically) and $429 million (up 4.8%), respectively, in the fourth quarter.
Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 6.4% year-over-year decline in organic sales to $451 million in the reported quarter.
Electrophysiology sales were down 1.8% year over year organically to $85 million. Neuromodulation sales declined 12% year over year on an organic basis to $232 million.
Other segments like Endoscopy plus Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $515 million (up 1.5% organically) and $376 million (up 0.6%), respectively.
Margins
Gross margin in the fourth quarter contracted 763 basis points (bps) year over year to 63.1%. There was a 17.5% rise in the cost of products sold to $1 billion.
Selling, general and administrative expenses dropped 5.9% to $1.03 billion. Research and development expenses declined 7.4% to $286 million. Meanwhile, royalty expenses of $14 million fell 17.6% year over year. Despite that, adjusted operating margin declined 782 bps to 14.1% in the reported quarter.
Guidance
The company provided its first quarter and full-year 2021 guidance.
First-quarter revenue growth is projected in the range of approximately 0-6% on a reported basis and (3)-3% on an organic basis. Adjusted earnings, excluding certain charges (credits) are expected in the range of 28-34 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 35 cents and $2.71 billion, respectively.
Full-year revenue growth is expected in the range of 13-19% on a reported basis and 12-18% on an organic basis. Adjusted earnings per share, excluding certain charges (credits), is expected in the range of $1.50-$1.60. The current Zacks Consensus Estimate for 2021 earnings and revenues is pegged at $1.61 and $11.5 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -12.92% due to these changes.
VGM Scores
Currently, Boston Scientific has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boston Scientific has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Boston Scientific (BSX) Down 2.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Boston Scientific (BSX - Free Report) . Shares have lost about 2.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Boston Scientific due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Boston Scientific Sees Disappointing Q4 Sales Across Core Segments
Boston Scientific posted adjusted earnings per share of 23 cents for the fourth quarter of 2020, which marked a 50% plunge from the year-ago figure. The figure also lagged the Zacks Consensus Estimate by 25.8%. The reported quarter’s adjustments include certain amortization expenses, acquisition/divestitures-related net charges and net investment impairment charges among others.
Reported earnings in the fourth quarter were 10 cents per share compared with the year-ago earnings per share of $2.83.
The company also registered sequential decline of 37.8%.
Full-year adjusted earnings per share was 96 cents, reflecting a 39.2% decline from 2019. It also missed the Zacks Consensus Estimate by 8.6%.
Revenues of $2.71 billion in the fourth quarter declined 6.8% year over year on a reported basis, down 8.3% on an operational basis (at constant exchange rate or CER). Revenues declined 8% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line, however, managed to remain in line with the Zacks Consensus Estimate.
Boston Scientific reported revenues of $9.91 billion for full-year 2020, down 7.7% on a reported basis, 7.8% on an operational basis and 11.3% on an organic basis. The top line missed the Zacks Consensus Estimate by 0.6%.
The company noted 370 basis pointsnegative impact on organic sales growth associated with the conversion of the U.S. WATCHMAN customers to a consignment inventory model and transition to the next-generation WATCHMAN FLX Left Atrial Appendage Closure (LAAC) Device.
Q4 Revenues in Detail
In the fourth quarter, revenues declined 9.2% in the United States on a reported basis (same operationally). Revenues were down 1.1% in the Europe, Middle East and Africa region (down 5.9%); 1.1% in the Asia Pacific zone (down 5.6%); 10.5% in Latin America and Canada (down 3.2%) and 9.9% in emerging markets (down 8.9%).
Segmental Analysis
Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro plus MedSurg.
The company generates maximum revenues from Cardiovascular. Sales from its sub segments, namely Interventional Cardiology and Peripheral Interventions were $585 million (down 23.4% year over year organically) and $429 million (up 4.8%), respectively, in the fourth quarter.
Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 6.4% year-over-year decline in organic sales to $451 million in the reported quarter.
Electrophysiology sales were down 1.8% year over year organically to $85 million. Neuromodulation sales declined 12% year over year on an organic basis to $232 million.
Other segments like Endoscopy plus Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $515 million (up 1.5% organically) and $376 million (up 0.6%), respectively.
Margins
Gross margin in the fourth quarter contracted 763 basis points (bps) year over year to 63.1%. There was a 17.5% rise in the cost of products sold to $1 billion.
Selling, general and administrative expenses dropped 5.9% to $1.03 billion. Research and development expenses declined 7.4% to $286 million. Meanwhile, royalty expenses of $14 million fell 17.6% year over year. Despite that, adjusted operating margin declined 782 bps to 14.1% in the reported quarter.
Guidance
The company provided its first quarter and full-year 2021 guidance.
First-quarter revenue growth is projected in the range of approximately 0-6% on a reported basis and (3)-3% on an organic basis. Adjusted earnings, excluding certain charges (credits) are expected in the range of 28-34 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 35 cents and $2.71 billion, respectively.
Full-year revenue growth is expected in the range of 13-19% on a reported basis and 12-18% on an organic basis. Adjusted earnings per share, excluding certain charges (credits), is expected in the range of $1.50-$1.60. The current Zacks Consensus Estimate for 2021 earnings and revenues is pegged at $1.61 and $11.5 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -12.92% due to these changes.
VGM Scores
Currently, Boston Scientific has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boston Scientific has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.