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Boston Scientific (BSX) Surges 4.6%: Will the Rally Continue?

Boston Scientific, Inc. BSX appears in good shape, with its shares rallying 4.6% since the fourth-quarter earnings release. The company is gaining from strong worldwide demand for its GI and pulmonary treatment options. The traction in Europe for its next-generation WATCHMAN FLX and a contribution from accretive acquisitions are important growth drivers.

The Zacks Rank #2 (Buy) stock has moved up 4.6% since the last earnings release compared with the industry’s rise of 1%. The Medical sector has increased 3.8% in the said time frame. The company has a market capitalization of $97.01 billion.

Quarterly earnings are expected to rise 12.7% in the next five years. BSX’s ROE for the trailing 12 months was 16.2%, better than the industry average of (12.2%).

What’s Aiding Boston Scientific?

MedSurg Market Share Gain Impressive: The Endoscopy business within MedSurg is gaining from strong worldwide demand for its broad range of gastrointestinal (GI) and pulmonary treatment options. In the fourth quarter of 2023, the company reported strong organic growth contribution from single-use imaging and AXIOS technologies. Endoscopy demonstrated notable strength in the United States, Latin America and Asia-Pacific, with new product momentum and healthy procedure demand over the past few quarters. The company, in 2023, received U.S. marketing authorization for an expanded indication of the AXIOS stent to include gallbladder drainage, increasing access to more patients with this platform.

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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 the fourth quarter of 2023, WATCHMAN’s organic sales grew 23% year over year. The U.S. demand remained strong and international growth was led by China and Japan. The company currently looks forward to initiating its Monotherapy trial, SIMPLIFY trial, later in 2024, which will study WATCHMAN FLX Pro with the simplified post-implant drug regimen.

What’s Ahead for the Stock?

Boston Scientific is expected to continue to outpace its peers within the EMEA market, banking on successful expansion in its base led by a diverse portfolio, new launches and commercial execution with healthy underlying market demand.  Further, the company expects to achieve over $1 billion in sales in China in 2024, supported by new product launches, supply chain agility and sustained investments in its talents and capabilities. Meanwhile, the company’s Pain franchise performance is expected to improve in 2024 following the recent launch of the U.S. WaveWriter Alpha DPN indication and the strong and real-world data on FAST recently presented at the North American Neuromodulation Society.

The company projects full-year 2024 net sales growth to be approximately 8.5-9.5% on a reported basis and approximately 8-9% on an organic basis. Full-year adjusted earnings per share are expected to be in the range of $2.23 to $2.27.

Estimate Trends

In the past 90 days, the Zacks Consensus Estimate for the company’s 2024 earnings has moved 0.9% north to $2.25.

The Zacks Consensus Estimate for 2024 revenues is pegged at $15.55 billion, suggesting a 9.2% growth from the 2023 reported number.

Key Picks

Some other top-ranked stocks from the broader medical space are Stryker Corporation SYK, Cencora, Inc. COR and Cardinal Health CAH.

Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.

Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.

COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.

Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.

CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.

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Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Stryker Corporation (SYK) : Free Stock Analysis Report

Cardinal Health, Inc. (CAH) : Free Stock Analysis Report

Cencora, Inc. (COR) : Free Stock Analysis Report

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