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Boston Scientific Gains on Impressive Preliminary Q4 Results

Zacks Equity Research

Boston Scientific Corporation BSX recently announced preliminary revenue results for fourth-quarter 2018. The company is slated to release its comprehensive financial results for the period on Feb 6.

Boston Scientific projects an impressive fourth-quarter performance and expects to meet the high-end of its own expectations on the revenue front. Following this announcement, shares rallied 2.8% to reach $35.38 at yesterday’s close.

In the to-be-reported quarter, Boston Scientific expects total revenue growth of 6.3% (up 8.2% on operational basis after excluding the impact of foreign currency fluctuations) on a year-over-year basis to $2.56 billion, in line with the current Zacks Consensus Estimate. However, this meets the high end of the company's earlier provided revenue guidance of $2.525-$2.565 billion. The solid top line is primarily expected on the back of growth across all of the company’s segments and geographical regions.

Revenues in Detail

Organic revenue growth in the quarter (excluding the impact of changes in foreign currency exchange rates and sales from the buyouts of Symetis SA, NxThera, Claret Medical and Augmenix, with no prior year comparable sales) is approximately 7% year over year.

The company achieved 7% growth in the United States on a reported basis (same operationally), 5.1% in Europe, Middle East and Africa region (up 9.2%); 5.2% in the Asia-Pacific region (up 7.1%), and 7.2% in Latin America and Canada (up 22.2%).

Segment Analysis

Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro and MedSurg.

The company generates maximum revenues from Cardiovascular. Sales from its Interventional Cardiology subsegment were up 5.1% on a reported basis (up 7.6% operationally) on a year-over-year basis. Also, sales from the Peripheral Interventions business were up 9.3% (up 11.4%), in the fourth quarter.

Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 0.2% year-over-year increase (up 1.8%) in the to-be-reported quarter.

Electrophysiology sales went up 6.4% year over year (up 8.1%).

Neuromodulation sales rose 18.1% year over year (up 19.1%).

Within other segments like Endoscopy and Urology and Pelvic Health (under the MedSurg broader group), sales rose 5.1% year over year (up 6.7%) and 10.9% year over year (up 12.3%), respectively.

While reporting financial results for the third quarter of fiscal 2018, Boston Scientific provided its business outlook for the fourth quarter of 2018. Adjusted earnings per share (EPS) are expected in the band of 30-32 cents. The consensus mark for EPS stands at 37 cents.

Share Price Movement

Boston Scientific has consistently outperformed its industry over the past three months. The stock has lost 2% compared with 10.7% decline of the industry.

Zacks Rank & Key Picks

Boston Scientific carries a Zacks Rank #4 (Sell) at present.

Some better-ranked stocks in the broader medical space are Veeva Systems VEEV, Surmodics, Inc. SRDX and athenahealth, Inc. ATHN.

Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2 (Buy).

athenahealth’s long-term earnings growth rate is projected at 17.7%. The stock carries a Zacks Rank of 2.

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