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Boston Scientific (BSX) Rides on Acquisitions, Innovation

Zacks Equity Research

On Mar 18, we issued an updated research report on Boston Scientific Corporation BSX. The company’s recent acquisitions have added various products (though many are under development) with immense potential to its portfolio. The stock carries a Zacks Rank #3 (Hold).

Over the past three months, shares of Boston Scientific have outperformed the industry it belongs to. The stock has inched up 0.4% versus the 5.3% decrease of its industry.

Boston Scientific delivered a solid fourth-quarter 2018 with both earnings and revenues surpassing the respective Zacks Consensus Estimate. Growth across all business lines and geographies was promising. The company is pulling out all the stops to strengthen its core businesses and invest in new technologies and global markets.

We are also optimistic about the receipt of an FDA approval for its SYNERGY Everolimus-Eluting Platinum Chromium Coronary Stent System with 4.50 mm and 5 mm diameter. The company also got an FDA nod for its Vercise Primary Cell and Vercise Gevia Deep Brain Stimulation (DBS) Systems. It is currently gearing up for the upcoming U.S. launch of VICI VENOUS STENT, which will be the first on-label VENOUS STENT in the said market.

As part of major developments, the company closed the purchase of Millipede and entered into an agreement to buy BTG plc. With the completion of the BTG buyout, the company expects to gain an enhanced category leadership position in interventional oncology, arterial and venous therapies. Meanwhile, Millipede is likely to leverage its position in the growing field of mitral regurgitation (MR) falling under the structural heart business.

We are also looking forward to the company’s recently-concluded consolidations, which are NxThera, Claret Medical, VENITI and Augmenix. These are projected to strongly upgrade the company’s inorganic growth profile going forward.

Moreover, the company’s significant progress with its LOTUS valve relaunch encourages us. Also, post the suspension of the Lotus valve in Europe, ACURATE TAVR valve platform continues to build a momentum. The company announced that it will begin a limited release of the LOTUS Edge TAVR platform during March in Europe. It hopes to initiate a controlled launch of the same in early second-quarter 2019 across the United States following the FDA approval. Millipede also noted that it began enrolling patients in the LOTUS REPRISE IV study at intermediate risk.

On the flip side, an unfavorable currency movement and product recall were major dampeners during the reported quarter. Strong competitors in the large medical device market also pose a tough challenge to Boston Scientific.

Key Picks

A few better-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Varian Medical Systems, Inc. VAR and Masimo, Inc. MASI, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABIOMED’s long-term earnings growth rate is expected at 27.67%.

Varian’s long-term earnings growth rate is projected at 8.00%.

Masimo’s long-term earnings are predicted to grow 15.60%.

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