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Boston Scientific (BSX) Down 1.7% 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 1.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Boston Scientific Q4 Earnings Lag Estimates, Operating Margin Grows
Boston Scientific posted adjusted earnings per share of 45 cents for the fourth quarter of 2022, in line with the year-ago figure. The figure missed the Zacks Consensus Estimate by 4.3%. The figure matched the lower end of the adjusted earnings per share guidance range of 45-48 cents.
The quarter’s adjustments included certain amortization expenses, litigation-related net charges, acquisition/divestitures-related net charges, and restructuring charges among others.
Reported earnings per share for the fourth quarter was 9 cents, a 50% rise from the year-ago quarter figure.
Full-year adjusted earnings per share was $1.71, a 4.9% rise from the year-ago period. This adjusted figure matched the lower end of the company’s guidance of $1.71 to $1.74. However, it missed the Zacks Consensus Estimate by 1.2%.
Fourth-quarter revenues of $3.24 billion improved 3.7% year over year on a reported basis and 8.7% on an operational basis (at a constant exchange rate or CER). Revenues grew 7.1% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line came in line with the Zacks Consensus Estimate. The quarter’s top-line performance also remained within the company’s projection of organic revenue growth of approximately 7-9%.
For 2022, revenues were $12.68 billion, up 6.7% on a reported basis, 11.1% on an operational basis and 8.7% on an organic basis, all compared to the year-ago period. Full-year revenues were also in line with the Zacks Consensus Estimate. The company’s guidance was 9% organic revenue growth for the full year.
Q4 Revenues in Detail
In the fourth quarter, revenues rose 10.5% in the United States on a reported basis (same operationally). Revenues were down 0.8% in the Europe, Middle East and Africa region (up 10.8%) and 4.1% in the Asia Pacific zone (up 15.3%). Revenues increased 14.6% in Latin America and Canada (up 17.7%) and 11.6% in emerging markets (up 23.3%).
Segmental Analysis
Boston Scientific recently reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg and Cardiovascular.
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions, were $1.53 billion (up 9.6% year over year organically) and $476 million (up 8.8%), respectively, in the fourth quarter.
Within MedSurg, Endoscopy generated revenues of $571 million, up 7.4% organically. Urology and Urology revenues were $477 million, reflecting organic growth of 11.8%. Neuromodulation within MedSurg reported $249 million in revenues, reflecting a 4.9% rise organically year over year.
Margins
Gross margin in the fourth quarter contracted 13 basis points (bps) year over year to 68.8%. There was a 4.1% rise in the cost of products sold to $1.01 billion.
Selling, general and administrative expenses rose 0.9% to $1.16 billion. Research and development expenses rose 3.1% to $330 million. Royalty expenses of $13 million increased 18.2% year over year. Adjusted operating margin expanded 87 bps to 22.4% in the reported quarter.
2023 Guidance
Boston Scientific provided its full-year and first-quarter 2023 guidance.
Full-year net sales growth is expected in the range of 5-7% on a reported basis. Net sales growth is expected to be in the range of 6-8% on an organic basis. The Zacks Consensus Estimate is currently pegged at $12.68 billion, indicating a 6.7% rise from the 2022 reported figure. Full-year adjusted earnings per share is expected in the range of $1.86 to $1.93. The Zacks Consensus Estimate of $1.73 remains below the guided range.
For the first quarter of 2023, revenue growth is projected in the range of approximately 3-5% on a reported basis (an increase of 6-8% organically). Adjusted earnings are expected in the range of 42-44 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 44 cents and $3.17 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Boston Scientific has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. 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 has been net zero. Notably, Boston Scientific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Boston Scientific (BSX) Down 1.7% 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 1.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Boston Scientific Q4 Earnings Lag Estimates, Operating Margin Grows
Boston Scientific posted adjusted earnings per share of 45 cents for the fourth quarter of 2022, in line with the year-ago figure. The figure missed the Zacks Consensus Estimate by 4.3%. The figure matched the lower end of the adjusted earnings per share guidance range of 45-48 cents.
The quarter’s adjustments included certain amortization expenses, litigation-related net charges, acquisition/divestitures-related net charges, and restructuring charges among others.
Reported earnings per share for the fourth quarter was 9 cents, a 50% rise from the year-ago quarter figure.
Full-year adjusted earnings per share was $1.71, a 4.9% rise from the year-ago period. This adjusted figure matched the lower end of the company’s guidance of $1.71 to $1.74. However, it missed the Zacks Consensus Estimate by 1.2%.
Fourth-quarter revenues of $3.24 billion improved 3.7% year over year on a reported basis and 8.7% on an operational basis (at a constant exchange rate or CER). Revenues grew 7.1% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line came in line with the Zacks Consensus Estimate. The quarter’s top-line performance also remained within the company’s projection of organic revenue growth of approximately 7-9%.
For 2022, revenues were $12.68 billion, up 6.7% on a reported basis, 11.1% on an operational basis and 8.7% on an organic basis, all compared to the year-ago period. Full-year revenues were also in line with the Zacks Consensus Estimate. The company’s guidance was 9% organic revenue growth for the full year.
Q4 Revenues in Detail
In the fourth quarter, revenues rose 10.5% in the United States on a reported basis (same operationally). Revenues were down 0.8% in the Europe, Middle East and Africa region (up 10.8%) and 4.1% in the Asia Pacific zone (up 15.3%). Revenues increased 14.6% in Latin America and Canada (up 17.7%) and 11.6% in emerging markets (up 23.3%).
Segmental Analysis
Boston Scientific recently reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg and Cardiovascular.
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions, were $1.53 billion (up 9.6% year over year organically) and $476 million (up 8.8%), respectively, in the fourth quarter.
Within MedSurg, Endoscopy generated revenues of $571 million, up 7.4% organically. Urology and Urology revenues were $477 million, reflecting organic growth of 11.8%. Neuromodulation within MedSurg reported $249 million in revenues, reflecting a 4.9% rise organically year over year.
Margins
Gross margin in the fourth quarter contracted 13 basis points (bps) year over year to 68.8%. There was a 4.1% rise in the cost of products sold to $1.01 billion.
Selling, general and administrative expenses rose 0.9% to $1.16 billion. Research and development expenses rose 3.1% to $330 million. Royalty expenses of $13 million increased 18.2% year over year. Adjusted operating margin expanded 87 bps to 22.4% in the reported quarter.
2023 Guidance
Boston Scientific provided its full-year and first-quarter 2023 guidance.
Full-year net sales growth is expected in the range of 5-7% on a reported basis. Net sales growth is expected to be in the range of 6-8% on an organic basis. The Zacks Consensus Estimate is currently pegged at $12.68 billion, indicating a 6.7% rise from the 2022 reported figure. Full-year adjusted earnings per share is expected in the range of $1.86 to $1.93. The Zacks Consensus Estimate of $1.73 remains below the guided range.
For the first quarter of 2023, revenue growth is projected in the range of approximately 3-5% on a reported basis (an increase of 6-8% organically). Adjusted earnings are expected in the range of 42-44 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 44 cents and $3.17 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Boston Scientific has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. 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 has been net zero. Notably, Boston Scientific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.