Here's Why You Should Retain Boston Scientific (BSX) Now
Boston Scientific Corporation BSX is well poised for growth in the coming quarters. It is backed by the strong worldwide demand for its GI and pulmonary treatment options and traction in Europe for its next-generation WATCHMAN FLX. The 2023 guidance indicating strong growth over 2022 levels builds confidence in the stock. However, unfavorable currency movements and stiff competition are a concern.
In the past year, this Zacks Rank #3 (Hold) stock has gained 20.1% compared with a 4.4% fall of the industry and a 16.5% rise of the S&P 500.
The renowned manufacturer of medical devices and products has a market capitalization of $80.31 billion. The company’s long-term projected growth of 12.5% compares with the industry’s growth projection of 11.7%.
Let’s delve deeper.
Factors At Play
Geographic Expansion Continues: Boston Scientific successfully continues with its expansion of operations across different geographies outside the United States. In 2022, 40% of the company’s consolidated revenues came from international regions.
In Europe, the Middle East and Africa (EMEA), Boston Scientific is successfully expanding its base banking on its diverse portfolio, new launches and commercial execution with healthy underlying market demand. In the third quarter, EMEA sales increased 10.9% year over year on an operational basis, with double-digit growth in seven of the company’s eight business units. Across the portfolio, Boston Scientific saw strength in new and ongoing product launches, including FARAPULSE and POLARx.
Long-Term Growth Strategies: In 2019, Boston Scientific provided a review of its long-term growth strategy and offered plans for product pipeline and strategic investments. In this regard, the company has recently talked about effective scaling up of its EP and WATCHMAN sales force, which is consistently resulting in strong growth. Based on the strong execution of the company’s strategic priorities, Boston Scientific, during the third-quarter earnings call, stated that most of its global business units are growing in line with or faster than the respective markets.
WATCHMAN, a Long-Term Growth Component: Boston Scientific’s structural heart programs are fast building momentum, banking on the strong performance of the WATCHMAN left atrial appendage closure device.
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In September, Boston Scientific received the FDA approval for its next generation of WATCHMAN FLX Pro. The company expects to see continued momentum within the WATCHMAN franchise supported by this approval and other significant investments in clinical evidence. In this regard, enrollment commenced in HEAL-LAA, a post-market study of the WATCHMAN FLX Pro device in the United States.
Downsides
Competitive Landscape: The presence of a large number of players has made the medical devices market highly competitive. The company participates in several markets, including Cardiovascular, CRM, Endosurgery and Neuromodulation, where it faces competition from large, well-capitalized companies such as Johnson & Johnson, Abbott, Medtronic, Stryker, Smith & Nephew and Edwards Lifesciences, apart from several other smaller companies.
Exposure to Currency Movement: With Boston Scientific recording 40% of its sales from the international market, it is highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the last few quarters, as in the case of other important MedTech players, too.
In 2023, the company expects an approximate 100 basis-point headwind on revenues from foreign exchange.
Estimate Trend
The Zacks Consensus Estimate for Boston Scientific’s 2023 earnings is pegged at $2.01 per share, indicating a 17.5% increase from the 2022 reported number.
The Zacks Consensus Estimate for 2023 revenues is pegged at $14.10 billion, suggesting an 11.2% rise from the 2022 figure.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Insulet PODD and DexCom DXCM. While Haemonetics and DexCom each carry a Zacks Rank #2 (Buy), Insulet presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 11.6% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days. The company's shares have plunged 40.9% in the past year compared with the industry’s decline of 7%.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.41 in the past 30 days. Shares of the company have fallen 7.8% in the past year compared with the industry’s decline of 7.1%.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Boston Scientific Corporation (BSX) : Free Stock Analysis Report
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