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Why Is Boston Scientific (BSX) Down 0.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Boston Scientific (BSX - Free Report) . Shares have lost about 0.9% in that time frame, underperforming 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 Q1 Earnings Beat Estimates, Margins Grow
Boston Scientific posted adjusted earnings per share of 47 cents for the first quarter of 2023, up 20.5% from the year-ago figure. The figure also exceeded the Zacks Consensus Estimate by 9.3%. The figure exceeded the company’s adjusted earnings per share guidance range of 42-44 cents.
The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring charges, among others.
Reported earnings per share for the first quarter was 21 cents, a 200% rise from the year-ago quarter figure of 7 cents.
First-quarter revenues of $3.39 billion improved 12% year over year on a reported basis and 14.9% on an operational basis (at a constant exchange rate or CER). Revenues grew 14% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 7.9%. The quarter’s top-line performance also exceeded the company’s projection of organic revenue growth of approximately 6-8%.
Q1 Revenues in Detail
In the first quarter, revenues rose 12.7% in the United States on a reported basis (same operationally). Revenues were up 14.2% in the Europe, Middle East and Africa region (up 20%) and up 5.9% in the Asia Pacific zone (up 15.4%). Revenues increased 17.4% in Latin America and Canada (up 20%) and 20.2% in emerging markets (up 26.3%).
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 $1.61 billion (up 15.4% year over year organically) and $503 million (up 11.5%), respectively, in the first quarter.
Within MedSurg, Endoscopy generated revenues of $577 million, up 11.5% organically. Urology revenues were $469 million, reflecting organic growth of 15.6%. Neuromodulation within MedSurg reported $234 million in revenues, reflecting a 13.7% rise organically year over year.
Margins
Gross margin in the first quarter expanded 87 basis points (bps) year over year to 69.3%. There was an 8.9% rise in the cost of products sold to $1.04 billion.
Selling, general and administrative expenses rose 14.6% to $1.22 billion. Research and development expenses rose 5.6% to $337 million. Royalty expenses of $11 million declined 8.3% year over year. Adjusted operating margin expanded 72 bps to 23.2% in the reported quarter.
2023 Guidance
Boston Scientific updated its full-year guidance and provided second-quarter 2023 projections.
Full-year net sales growth is expected in the range of 8.5-10.5% on a reported basis (earlier estimate was 5-7% growth). Net sales growth is expected to be in the range of 8-10% on an organic basis (6-8%). The Zacks Consensus Estimate is currently pegged at $13.49 billion, indicating a 6.4% rise from the 2022 reported figure. Full-year adjusted earnings per share is expected in the range of $1.90 to $1.96 ($1.86 to $1.93). The Zacks Consensus Estimate of $1.90 is in line with the lower end of the guided range.
For the second quarter of 2023, revenue growth is projected in the range of approximately 6.5-8.5% on a reported basis (an increase of 7-9% organically). Adjusted earnings are expected in the range of 48-50 cents per share. The current Zacks Consensus Estimate for second-quarter earnings and revenues is pegged at 48 cents and $3.42 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Boston Scientific has an average Growth Score of C, though it is lagging a bit 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Boston Scientific has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Boston Scientific (BSX) Down 0.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Boston Scientific (BSX - Free Report) . Shares have lost about 0.9% in that time frame, underperforming 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 Q1 Earnings Beat Estimates, Margins Grow
Boston Scientific posted adjusted earnings per share of 47 cents for the first quarter of 2023, up 20.5% from the year-ago figure. The figure also exceeded the Zacks Consensus Estimate by 9.3%. The figure exceeded the company’s adjusted earnings per share guidance range of 42-44 cents.
The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring charges, among others.
Reported earnings per share for the first quarter was 21 cents, a 200% rise from the year-ago quarter figure of 7 cents.
First-quarter revenues of $3.39 billion improved 12% year over year on a reported basis and 14.9% on an operational basis (at a constant exchange rate or CER). Revenues grew 14% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 7.9%. The quarter’s top-line performance also exceeded the company’s projection of organic revenue growth of approximately 6-8%.
Q1 Revenues in Detail
In the first quarter, revenues rose 12.7% in the United States on a reported basis (same operationally). Revenues were up 14.2% in the Europe, Middle East and Africa region (up 20%) and up 5.9% in the Asia Pacific zone (up 15.4%). Revenues increased 17.4% in Latin America and Canada (up 20%) and 20.2% in emerging markets (up 26.3%).
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 $1.61 billion (up 15.4% year over year organically) and $503 million (up 11.5%), respectively, in the first quarter.
Within MedSurg, Endoscopy generated revenues of $577 million, up 11.5% organically. Urology revenues were $469 million, reflecting organic growth of 15.6%. Neuromodulation within MedSurg reported $234 million in revenues, reflecting a 13.7% rise organically year over year.
Margins
Gross margin in the first quarter expanded 87 basis points (bps) year over year to 69.3%. There was an 8.9% rise in the cost of products sold to $1.04 billion.
Selling, general and administrative expenses rose 14.6% to $1.22 billion. Research and development expenses rose 5.6% to $337 million. Royalty expenses of $11 million declined 8.3% year over year. Adjusted operating margin expanded 72 bps to 23.2% in the reported quarter.
2023 Guidance
Boston Scientific updated its full-year guidance and provided second-quarter 2023 projections.
Full-year net sales growth is expected in the range of 8.5-10.5% on a reported basis (earlier estimate was 5-7% growth). Net sales growth is expected to be in the range of 8-10% on an organic basis (6-8%). The Zacks Consensus Estimate is currently pegged at $13.49 billion, indicating a 6.4% rise from the 2022 reported figure. Full-year adjusted earnings per share is expected in the range of $1.90 to $1.96 ($1.86 to $1.93). The Zacks Consensus Estimate of $1.90 is in line with the lower end of the guided range.
For the second quarter of 2023, revenue growth is projected in the range of approximately 6.5-8.5% on a reported basis (an increase of 7-9% organically). Adjusted earnings are expected in the range of 48-50 cents per share. The current Zacks Consensus Estimate for second-quarter earnings and revenues is pegged at 48 cents and $3.42 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Boston Scientific has an average Growth Score of C, though it is lagging a bit 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Boston Scientific has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.