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Boston Scientific Rides on New Products Amid Dull Pacer Sales

Zacks Equity Research

On Aug 12, 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 year, shares of Boston Scientific have outperformed the industry it belongs to. The stock has rallied 29.7% compared with the 7.8% rise of its industry.

Growth across majority of its business lines and geographies was promising. The company is leaving no stone unturned to strengthen its core businesses and invest in new technologies as well as global markets. Within structural heart, the controlled launch of LOTUS Edge Aortic Valve System in United States and Europe is executing well with positive customer feedback flowing in. According to Boston Scientific, the combined strength of WATCHMAN, ACURATE, LOTUS Edge and SENTINEL has positioned the company well, to meet its structural heart revenue guidance for 2019 of $700 million to $725 million.

Boston Scientific Corporation Price

Boston Scientific Corporation Price

Boston Scientific Corporation price | Boston Scientific Corporation Quote

Within MedSurg, the company is on track for the year-end launch of Exalt-D Single-Use Duodenoscope, which is used in ERCP procedures. According to Boston Scientific, this represents a significant opportunity in 2020 and beyond. Meanwhile, as a major development, the company received an approval from the United Kingdom's National Health Service for inclusion of the SpaceOAR Hydrogel in its Innovation and Technology Payment program, expanding treatment access to men undergoing radiotherapy for prostate cancer.

We are also looking forward to the company’s recent acquisitions which are NxThera, Claret Medical, VENITI and Augmenix. These have already started to strongly contribute to the company’s inorganic growth profile.

On the flip side, declining worldwide pacemaker sales over the recent past persisted to weigh on Boston Scientific's CRM results. In the second quarter, the company witnessed a low-single-digit decline in pacemaker performance due to certain product gaps between CRT-D pacing and MRI line.  The company currently anticipates a modest pacer headwind for full-year 2019. However, pacemaker sales should gradually improve with new product launches ((including the launch of RESONATE platform) and easier comps.

An unfavorable currency movement and product recall were major dampeners during the reported quarter. Tough competitors in the large medical device market also pose a difficult challenge to Boston Scientific.

Key Picks

A few better-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and NuVasive Corporation NUVA. Each of these carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy)  stocks here.

Medtronic’s long-term earnings growth rate is expected at 7.13%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

NuVasive’s long-term earnings growth rate is expected to be 12.75%.

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