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BofA Lowers Boston Scientific Revenue Estimates On FDA Warning, But Keeps Buy Rating

Dave Royse

A Food and Drug Administration warning about possible dangers from balloons and stents coated with the drug paclitaxel is bad news for Boston Scientific Corporation (NYSE: BSX)’s Eluvia stent, but Bank of America Merrill Lynch is still recommending the stock on the basis of the company’s broad overall portfolio.

The Analyst

BofA's Bob Hopkins maintained a Buy rating on Boston Scientific with a $45 price target. 

The Thesis

Hopkins lowered revenue estimates for Eluvia from $150 million to about $55 million in 2019 and from about $250 million to about $65 million in 2020. 

The news around paclitaxel is clearly negative and likely to meaningfully limit Eluvia sales, the analyst said.

“Given the strength of BSX’s broad product portfolio however, we continue to think BSX can deliver total company organic revenue growth in the 7-8-percent range, but the case for meaningful upside to consensus is now weaker, in our view."

 The paclitaxel issues “should be manageable negatives given BSX's broad portfolio," Hopkins said. 

What Happened

The FDA said Friday that it notified doctors that stents coated with the common cancer chemotherapy drug paclitaxel may be associated with a higher incidence of death in patients.

A preliminary review “has identified a potentially concerning signal of increased long-term mortality in study subjects treated with paclitaxel-coated products compared to patients treated with uncoated devices,” the FDA said in the letter.

The agency is now recommending the use of other stents for most peripheral arterial disease patients.

Price Action

Boston Scientific shares were down 5.05 percent at $38.18 at the time of publication Monday. 

Related Links:

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No Fundamental Reason For Boston Scientific Shares' Underperformance, RBC Upgrades Stock

Latest Ratings for BSX

Date Firm Action From To
Dec 2018 Credit Suisse Initiates Coverage On Outperform
Nov 2018 UBS Initiates Coverage On Buy
Oct 2018 Argus Maintains Buy Buy

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