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Boston Scientific Hits New 52-Week High: What's Driving it?

Zacks Equity Research

Shares of Boston Scientific Corporation BSX reached a new 52-week high of $45.27 on Dec 13, closing the session marginally lower at $45.09. The stock has rallied 12.5% since its third-quarter earnings announcement on Oct 23.

The company’s better-than-expected earnings results in the third quarter of 2019, backed by robust segmental and global revenue growth, drove the rally.

Let’s delve deeper.

 



 

Q3 Performance

The company exited the third quarter of 2019 on a solid note, with better-than-expected numbers. It witnessed year-over-year revenue improvements in all segments as well as globally, which bode well.

Investors are upbeat about the solid year-over-year improvement in both domestic and global businesses. We are also optimistic about the company’s efforts to strengthen its core businesses and invest in the new technologies as well as the global markets. These resulted in the uptick in third-quarter sales across most geographies.

Despite incurring an escalation in production costs, the company registered rise in gross profit on solid top-line performance.

Over and above, the raised yearly revenue guidance buoyed investors’ optimism as this indicates that the bullish trend will continue through the rest of the year.

Other Growth Drivers

Product Approvals and Launches: Investors have been optimistic about Boston Scientific’s slew of regulatory approvals of late. The company received the FDA clearances for its products like EXALT Model D Single-Use duodenoscope, Premarket Approval (PMA) application to market the Eluvia Drug-Eluting Vascular Stent system and ImageReady MRI labeling for the Vercise Gevia Deep Brain Stimulation (DBS) system.

The company launched the WATCHMAN Left Atrial Appendage Closure Device in Japan upon securing positive local reimbursement in the third quarter of 2019. It is also quite upbeat about the robust performance of the LOTUS Edge Aortic Valve system on the FDA clearance received in April 2019, and subsequent commercial launch in the United States and Europe.

Acquisitions: Boston Scientific’s acquisition of BTG (completed in August 2019) is expected to be a major boost for its Peripheral Intervention (PI) business (under the broader Cardiovascular segment) in the upcoming quarters. Other than this, acquisitions like Millipede (within Structural Heart), Claret Medical, VENITI and Augmenix are significant value additions to the company’s portfolios.

Focus on Emerging Markets: Investors are also optimistic about the company maintaining the ongoing growth momentum in the emerging markets of Europe and Asia. Boston Scientific launched SYNERGY MEGATRON in Europe as an effort to boost the emerging market strategy. It is encouraged by strong customer adoption of the next-generation Watchman FLX in Europe. As a part of the company’s focus on emerging markets, it is planning to launch ACURATE neo2 in Europe.

Zacks Rank & Key Picks

Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, National Vision Holdings, Inc EYE and ResMed Inc RMD.

Haemonetics currently has a Zacks Rank #2 (Buy) and a projected long-term earnings growth rate of 13.5%.

National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ResMed’s long-term earnings growth rate is estimated at 14%. It currently flaunts a Zacks Rank #1.

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