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Boston Scientific Grows on New Products, Currency Woe Ails


On Oct 9, 2017, we issued an updated research report on leading medical devices company, Boston Scientific Corporation BSX.

Over the past three months, Boston Scientific has been trading above the broader industry. The stock has improved 7% compared with the broader industry's 4.7% gain during the period.

Among the recent upsides, worth mentioning is the company’s acquisition of Symetis, in a bid to fortify the European structural heart business. We are also encouraged by the company securing multiple product approvals both in domestic as well as overseas markets. Notably, the company received an FDA approval for the RESONATE family of ICD and CRT-D systems.

Additionally, the market holds optimism on the stock, following the company’s recent release of an outline on sustained growth strategy, focusing on planned expansion in new markets and consolidating product lines across all business segments. The company particularly plans to launch products into high-growth adjacent markets with a strong potential to reap an incremental $13 billion in market opportunity by 2020.

While adverse foreign exchange continues to pose challenges, we are concerned with the company’s recall of one of its prime products, Lotus range of heart devices. It is important to note that last quarter, foreign exchange headwind affected the company’s top line by $23 million and adjusted gross margin by 50 basis points.

Also, a dull defibrillator sale within its core Cardiac Rhythm Management (CRM) continues to remain a drag for overall growth. The woes of a challenging economy and a competitive landscape persistently burden the stock.

However, given the company’s bullish second-quarter 2017 results and several recent developments, we find quite a few positive factors to rely on. The company is leaving no stone unturned to reinforce its core businesses and invest more in global markets.

Zacks Rank & Key Picks

Boston Scientific carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the medical sector are Orthofix International N.V. OFIX, Thermo Fisher Scientific Inc. TMO and IDEXX Laboratories, Inc. IDXX. Orthofix International sports a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories and Thermo Fisher carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orthofix International has a long-term expected earnings growth rate of 11.8%. The stock has rallied roughly 39% over the last six months.

Thermo Fisher has a long-term expected earnings growth rate of 16.3%. The stock has gained 21.4% last year.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has surged 35.8% last year.

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