Boston Scientific Society (BSX – Free Report) benefits from strategic acquisitions. The recently concluded takeover of Lumenis LTD. encourages optimism. The strength of the structural core sector also looks encouraging. A stable solvency position is an added advantage. However, lower sales of pacemakers and adverse currency fluctuations do not bode well.
Over the past year, Zacks Rank # 3 (Hold) stock has gained 13.3% vs. 3.2% industry growth. The S&P 500 rose 32.3% over the same period.
The famous maker of medical devices and products has a market capitalization of $ 60.94 billion. Its profits for the second quarter of 2021 were 8.1% higher than Zacks’ consensus estimate.
The company’s projected long-term growth of 9.3% compares to the industry’s projection of 16.5% and S&P 500 expectations of 11.4%. The company’s profits have beaten estimates in three of the past four quarters and missed just one, with the average surprise being 13.41%.
Image source: Zacks Investment Research
Let’s dig deeper.
Factors in play
Value-added acquisitions: We are optimistic about the recent acquisitions of Boston Scientific, which have introduced a host of new products (many of which are in development) with enormous potential. Using its differentiated laser technology, the recently completed acquisition of Israel-based Lumenis expands the company’s urology portfolio. Other than that, the completion of the Preventice Solutions acquisition contributed 240 basis points to the company’s second quarter revenue growth. Within electrophysiology, the imminent acquisition of Farapulse should allow the company to strengthen its position in the emerging field of pulsed field ablation. Other strategic acquisitions of Boston Scientific include BTG, Millipede (within Structural Heart) Claret Medical, VENITI and Augmenix.
Structural core, a component of long-term growth: Boston Scientific’s structural heart programs are rapidly gaining momentum, building on the strong performance of the WATCHMAN Left Atrial Appendage Closure and ACURATE TAVR Valve. In this regard, WATCHMAN recently received a refund in Japan. The new generation WATCHMAN FLX is firmly conquering the European market. In the second quarter, Boston Scientific organic sales in interventional cardiology increased 55.2% on double-digit growth from the Structural Heart Valves, WATCHMAN and Complex PCI and Imaging franchises. In TAVR, the launch of ACURATE neo2 continued to do well in Europe, supported in part by real world data presented at Euro PCR.
Stable solvency structure: Boston Scientific ended the second quarter of 2021 with cash and cash equivalents of $ 2.68 billion. Total debt for the quarter of $ 9.11 billion was much higher than the corresponding level of cash and cash equivalents. However, the company has $ 262 million in short-term debt on its balance sheet, which is far less than the current amount of cash. This is good news in terms of the company’s solvency position, especially during the time of the global pandemic, when it mainly faces the shutdown of manufacturing and global supply. .
Sales of pacemakers are still declining: The decline in worldwide sales of pacemakers in recent years has continued to weigh on Boston Scientific’s CRM results. However, pacemaker sales are expected to gradually improve with new product launches (including the launch of the RESONATE platform) and easier compositions.
Exposure to currency movement: Adverse currency movements have been a major drag for Boston Scientific in recent quarters, as has been the case with other notable MedTech players. With 47% of its turnover generated internationally, the company remains very exposed to currency fluctuations.
Competitive landscape: Boston Scientific is present in several markets, including Cardiovascular, CRM, Endosurgery and Neuromodulation. The company faces significant competition in these markets from large, well-capitalized companies such as Medtronic plc (MDT – Free Report), with the exception of several other small businesses.
Estimate the trend
Over the past 90 days, Zacks’ consensus estimate for earnings has moved 1.9% north to $ 1.61.
Zacks’ consensus estimate for Q3 2021 revenue is set at $ 2.99 billion, which suggests a 12.46% increase from the figure released a year ago.
Zacks rank and choice of keys
Two top-ranked stocks in the medical products industry include National Vision Holdings, Inc. (EYE – Free report) and BellRing Brands, Inc. (BRBR – Free Report), each carrying a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
National Vision has a long-term profit growth rate of 23%.
BellRing Brands has a long-term profit growth rate of 29.1%.