Boston Scientific Corporation ( BSX Quick Quote BSX - Free Report) has been gaining from its slew of strategic acquisitions and product launches. The company ended the fourth quarter with better-than-expected results. Robust performance by the Electrophysiology business instills investor confidence. However, mounting operating expenses and foreign exchange headwinds raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 12.4% against a 15.6% fall of the
industry and a 8.9% rise of the S&P 500.
The renowned manufacturer of medical devices and products has a market capitalization of $63.21 billion.
Over the past five years, the company’s earnings grew 8.1%, way ahead of the industry 9.1% growth and the S&P 500’s 2.8% increase. The company’s long-term projected growth of 10.3% compares with the industry’s growth projection of 16.6% and the S&P 500’s expectation of 11% growth.
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Let’s delve deeper.
Factors At Play Impressive Value-Adding Buyouts: We are impressed with Boston Scientific’s recent acquisitions that have added numerous products (though many are under development) with immense potential. The company is optimistic about its Lumenis acquisition, which expands the Urology portfolio with differentiated laser technology. The Baylis Medical acquisition is anticipated to expand the company’s Electrophysiology and Structural Heart product offerings.
The company closed the acquisition of Devoro in the fourth quarter and is currently looking forward to launching its arterial and venous offerings in the second half of 2022.
Strategic Investments to Drive Electrophysiology: During the fourth quarter, Boston Scientific’s Electrophysiology sales were up 16% organically year over year. For full-year 2021, international Electrophysiology sales grew 38% year over year on a full-year operational basis, driven by the company’s innovative portfolio, including POLARx, StablePoint and Farapulse. The company is optimistic regarding the Electrophysiology business prospects as it looks forward to strengthening the business with the addition of Baylis Medical, which is anticipated to close in the first quarter of 2022. Impressive Q4 Results: Boston Scientific’s fourth-quarter adjusted earnings and revenues surpassed the Zacks Consensus Estimate. The company registered a year-over-year improvement in organic sales, indicating a strong rebound in the legacy business from the pandemic mayhem. The robust growth across Peripheral Interventions, EP and Endoscopy businesses, fueled by product launches like TheraSphere, POLARx and AXIOS, buoys optimism.
The company also reported margin expansion on a year-over-year basis. The initial 2022 guidance with strong organic growth expectations looks promising.
Downsides Escalating Costs: During the fourth quarter, Boston Scientific’s selling, general and administrative expenses rose 12.3%, while research and development expenses increased 11.9% year over year. These escalating expenses are building significant pressure on the company’s bottom line. Pacemaker Sales Still Sluggish: Declining worldwide pacemaker sales over the recent past continued to weigh on Boston Scientific's CRM results. However, pacemaker sales should gradually improve with new product launches (including the launch of RESONATE platform) and easier comps. Forex Woes: 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 is the case of other key MedTech players too. Estimate Trend
Over the past 90 days, the Zacks Consensus Estimate for Boston Scientific’s 2022 earnings has moved 4.9% down to $1.76.
The Zacks Consensus Estimate for 2022 revenues is pegged at $12.79 billion, suggesting a 7.6% rise from the 2021 reported number.
A few better-ranked stocks in the broader medical space are
Owens & Minor, Inc. ( OMI Quick Quote OMI - Free Report) , Abiomed, Inc. ( ABMD Quick Quote ABMD - Free Report) and McKesson Corporation ( MCK Quick Quote MCK - Free Report) .
Owens & Minor has a long-term earnings growth rate of 8.8%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 29.5%, on average. It currently flaunts a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Owens & Minor has outperformed the industry over the past year. OMI has gained 15.4% against a 15.6% industry decline in the said period.
Abiomed has an estimated long-term growth rate of 20%. Abiomed’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.2%. It currently carries a Zacks Rank #2.
Abiomed has underperformed the industry over the past year. ABMD has lost 10% against the industry’s 1% growth over the past year.
McKesson has a long-term earnings growth rate of 11.9%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 67.2% in the said period compared with 9.7% growth of the industry.