Boston Scientific Corporation BSX is well poised for growth in the coming months, backed by strong third-quarter 2021 results. New acquisitions like Preventice, Farapulse and Lumenis Surgical bode well for the stock. However, stiff competition and foreign exchange fluctuations remain concerns.
This developer, manufacturer, and marketer of medical devices for interventional medical specialties has a market cap of $54.3 billion. The company has an earnings growth rate of 9.5% for the next five years.
This Zacks Rank #3 (Hold) company has gained 11.7% against the industry’s 6.9% fall and S&P 500’s 25.2% rise.
Key Growth Divers
Impressive Q3 Results: Boston Scientific ended the third quarter with adjusted earnings surpassing the Zacks Consensus Estimate. Despite the temporary impact of the resurgence of COVID-19 on procedure volumes, the company reported year-over-year growth banking on the recent product launches. Barring CRM, organic revenues at each of its core business segments and geographies rose in the reported quarter. Specifically, the company delivered solid growth in the third quarter across PI, EP and Endo, fueled by new and ongoing product launches like TheraSphere, POLARx and AXIOS.
Impressive Value-Adding Acquisitions: We are impressed with Boston Scientific’s recent acquisitions that have added numerous products (though many are under development) with immense potential. This, in turn, should help boost the top line in the long term. The company is optimistic about its recently acquired Israel-based Lumenis that develops and commercializes energy-based medical solutions. The acquisition expands Boston Scientific’s Urology portfolio with its differentiated laser technology. Apart from this, the acquisition of Preventice Solutions establishes a strong position for Boston Scientific in the field of cardiac diagnostics.
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New Strategic Investments to Drive Electrophysiology: We are optimistic about Boston Scientific’s impending acquisition of Farapulse. Notably, Farapulse is the only company with a commercially approved pulse ablation product in Europe and is actively enrolling its U.S. IDE, ADVENT trial. The company currently looks forward to bringing this differentiated therapy into Boston Scientific’s Electrophysiology portfolio in the third quarter. In this regard, the global Electrophysiology (EP) market is poised to reach a value of around $8.27 billion by 2022 (per data by Allied Market Research).
Exposure to Currency Movement: With Boston Scientific recording 47% of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the last few quarters, as is the case with other key MedTech players.
Competitive Landscape: The presence of many 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 along with several smaller firms.
Boston Scientific has been witnessing a positive estimate revision trend for the fourth quarter of 2021. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 2.5% north to 41 cents.
The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2021 revenues is pegged at $3.02 billion, suggesting 9.7% growth from the year-ago reported number.
A few better-ranked stocks from the broader medical space are Thermo Fisher Scientific Inc. TMO, Laboratory Corporation of America Holdings, or LabCorp LH and Medpace Holdings, Inc. MEDP, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher Scientific reported third-quarter 2021 adjusted earnings per share (EPS) of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.
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