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Can Solid IC Growth Aid Boston Scientific (BSX) Q4 Earnings?

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Zacks Equity Research
·6 min read
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Boston Scientific Corporation BSX is scheduled to report fourth-quarter 2019 results on Feb 5, before the opening bell.

In the last reported quarter, the company’s earnings per share exceeded the Zacks Consensus Estimate by 2.63%. Meanwhile, it delivered a positive surprise in three of the trailing four quarters, the average beat being 1.97%.

Let’s see how things are shaping up prior to this announcement.

Key Catalysts

We are upbeat about solid contributions from Boston Scientific’s Cardiovascular business group, which comprises Interventional Cardiology (IC) and Peripheral Interventions (PI).

Interventional Cardiology

We are once again optimistic about the IC business, which is likely to have helped the company maintain an impressive global growth momentum in the fourth quarter as well, courtesy of an innovative portfolio and robust commercial teamsacross structural heart and coronary therapies. Complex PCI (percutaneous coronary intervention) products within IC are gaining a strong traction from successful global expansion efforts.

Within IC, the company is demonstrating consistent strength in structural heart with WATCHMAN, ACURATE, SENTINEL and complex PCI and PCI guidance portfolios. In the last reported quarter, WATCHMAN sales growth rate accelerated from the second-quarter level as the platform continued to build global momentum on sturdy customer adoption. With Watchman recently securing a reimbursement approval in Japan and riding on the rising uptake and expanding international footprint of the device, this trendmost likely continued in the fourth quarter too.

Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation Price and EPS Surprise
Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation price-eps-surprise | Boston Scientific Corporation Quote

Within catheter business, the ACURATE neo sales grew faster than the market during the third quarter and the product is now available across 45 countries. On continued solid global uptake, we expect this uptrend to reflect on the company’s top line in the upcoming quarterly results as well.

The SENTINEL Cerebral embolic protection device’s rollout has been going on extremely well, leading to robust growth rates as supply scales up. We expect this momentum to boost the impending quarterly results.

Further, the launch of LOTUS Edge in the United States and Europe is drawing a favorable customer response and is also expected to get reflected in the to-be-reported quarter’s results.

The Zacks Consensus Estimate for IC revenues is pegged at $682 million, indicating an increase of 10% from the year-ago reported figure.

Peripheral Interventions

In recent quarters, the PI business steadily demonstrated a solid uptrend across segments like peripheral arterial disease, venous and interventional oncology. The unveiling of Vici Venous Stent in the United States and Eluvia DES globally is doing well and will most likely positively impact the to-be-reported quarter’s results.

Further, with the completion of BTG acquisition (in August), the consolidated entity is expected to have been significantly accretive to the fourth-quarter top line. In this regard, BTG has three primary businesses, of which Interventional Medicine portfolio including various PI product lines is the largest.

The Zacks Consensus Estimate for fourth-quarter PI revenues stands at $369 million, suggesting a 22.2% rise from the prior-year reported figure.

Other Factors at Play

Among other segments, MedSurg is expected to report stable numbers for the fourth quarter, led by growth within endoscopy. This is likely to have been fueled by a series of multiple introductions across several franchises, most notably in infection prevention, therapeutic imaging, biliary and luminal hemostasis product lines.

Urology and Pelvic Health segment is also likely to have registered sturdy growth in the fourth quarter, driven by a likely uptick in Stone franchise via LithoVue, lithotripsy and laser portfolio as well as emerging market growth.

Within neuromodulation, the company might have register robust sales growth in deep brain stimulation and across the continuum of care for pain patients through complementary platforms in SCS, RF and Vertiflex. The company earlier noted that it expects a steady improvement in SCS for the fourth quarter with WaveWriter software enhancement.

Preliminary Results at a Glance

For the to-be-reported quarter, Boston Scientific projects total revenue growth of 13.4% to $2.90 billion from the year-ago reported figure, indicating 14.1% rise on an operational basis and 7.3% improvement on an organic basis. Notably, the company’s expectation for the same fell below the Zacks Consensus Estimate of $2.92 billion. The preliminary figures are near the lower end of the company’s guidance of 13-15% (reported basis), 14-16% (operational basis) and 8-9% (organically).

Per Boston Scientific, revenues in the fourth quarter improved in all segments, except for Specialty Pharmaceuticals. Data for the Specialty Pharmaceuticals is unavailable due to its integration since the BTG acquisition in August 2019.  Excluding buyouts and divestitures, the company's total revenues are predicted to increase 6.8%.

(read more: Boston Scientific Stock Dips on Dull Preliminary Q4 Results)

Which Way Are Estimates Trending?

The Zacks Consensus Estimate for fourth-quarter total revenues of $2.92 billion suggests growth of 14.1% from the prior-year reported number. Also, the consensus mark for earnings of 44 cents per share implies a 12.8% rise from the year-ago reported figure.

What Our Quantitative Model Predicts

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. But this is not the case here as you will see below.

Earnings ESP:Boston Scientific has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:Boston Scientific carries a Zacks Rank #3. 

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this time around.

DexCom, Inc. DXCM currently has an Earnings ESP of +17.07% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA Inc. XRAY presently has an Earnings ESP of +1.16% and a Zacks Rank of 2.

Tandem Diabetes Care, Inc. TNDM has an Earnings ESP of +27.59%. It currently sports a Zacks Rank of 1.

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