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Millipede to Aid Boston Scientific, LOTUS Relaunch Lag Ails

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On Feb 4, 2018, we issued an updated research report on leading medical devices company, Boston Scientific Corporation (BSX - Free Report) . The stock carries a Zacks Rank #3 (Hold).

Notably, the U.S. House and Senate’s decision to suspend the medical device tax for another two years has come as a breath of fresh air to medical device mammoths like Boston Scientific. Per the company, this temporary suspension will in turn allow it to continue with its plans for investing in innovative medical products. Meanwhile, the company is intent on working toward complete repeal of the MedTech tax.

We are also encouraged by Boston Scientific’s major investment in Santa Rosa, CA-based Millipede. This move is expected to consolidate the company’s position in the growing field of mitral regurgitation (MR) falling under its structural heart business. Millipede is the developer of IRIS Transcatheter Annuloplasty Ring System for treatment of severe MR. On a positive note, the product claims to be highly customizable to a specific patient's anatomy and disease state.

This apart, a gradually improving foreign exchange scenario has started to contribute to the company’s overall top-line performance. The promising 2018 view is also impressive.

On the flip side, declining worldwide pacemaker sales over the recent past continued to weigh on Boston Scientific's CRM (Customer Relationship Management) results. In the fourth quarter of 2017, the company witnessed a high single-digit decline in pacemaker performance due to tough comparisons drawn with stronger revenues reaped after the U.S. launch of the company’s Brady MRI linepost in April 2016. Although of late, the company has taken several measures to rebound this trend, the near-term outlook still looks bleak.

Additionally, the fate of Lotus valve issue seems in limbo for some more time for Boston Scientific as recently, the company announced a further delay in its earlier-reported timelines for the commercial return of the LOTUS Edge Aortic Valve System in Europe and the United States, following the product’s voluntary recall last February.

 

In sync with the above downtrends, Boston Scientific has been trading below the broader industry over the past three months. The stock has lost 5.5% compared with the broader industry's 3% rise in the period.

Key Picks

A few better-ranked stocks in the broader medical space are Abiomed (ABMD - Free Report) , athenahealth (ATHN - Free Report) and Cardinal Health (CAH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abiomed has an expected long-term growth rate of 31.5%. The stock has soared 61.8% over the last six months, surpassing the broader industry’s performance.

athenahealth has a projected long-term growth rate of 22.3%. The stock has increased 11.8% over the last three months, above the industry’s gain.

Cardinal Health has an estimated long-term growth rate of 8.5%. Last month, the stock has gained 3.4%, higher than the industry’s growth.

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