Boston Scientific Upgraded to Buy


On Aug 21, we upgraded medical device major Boston Scientific Corporation (BSX) to a Zacks Rank #2 (Buy). The upgrade came on the back of encouraging second-quarter 2013 results.

Why the Upgrade?

The US defibrillator and stent markets have remained major overhangs over the past several quarters. Despite several initiatives undertaken by the company to revive its top line, we remain cautious as its core segments, implantable cardioverter defibrillator and DES (contributing 35% of sales) are still taking a toll on the numbers.

Despite challenging economic conditions, competitive environment, pressure on core segments and a larger-than-expected currency headwind, Boston Scientific posted solid second-quarter 2013 results, which beat on both lines. Margin expansion is another upside. Based on these encouraging numbers, the company raised its 2013 revenues and EPS guidance.

Moreover, Boston Scientific is resorting to all available means in order to return to growth. The company has a strong pipeline of products under development. The launch of these products should drive the top line. We are encouraged by the focus on emerging markets, especially India and China. Boston Scientific plans to invest approximately $150 million in China over the next 5 years to build a local manufacturing operation.

The stronger-than-anticipated results triggered an uptrend in the Zacks Consensus Estimate, as analysts become more constructive on the stock’s future performance. The Zacks Consensus Estimate increased 3.0% to 69 cents for 2013 and 4.1% to 76 cents per share for 2014 in the past 30 days.

Other Stocks to Consider

Apart from Boston Scientific, the other stocks worth considering in the MedTech industry include Affymetrix Inc. (AFFX), Alere Inc. (ALR) and Gilead Sciences Inc. (GILD), all carrying a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on BSX

Read the Full Research Report on GILD

Read the Full Research Report on AFFX

Read the Full Research Report on ALR

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