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Boston Scientific Rises 8.3% on Upbeat 4Q Preliminary Sales

Zacks

Boston Scientific BSX stock gained 8.33% to $27.96 at Jan 9’s close of trading, following the company’s announcement of an upbeat fourth-quarter 2017 preliminary sales performance. Notably, Boston Scientific is slated to release fourth-quarter and 2017 results on Feb 1, before the market opens.

Year over year, preliminary net sales for the quarter has been forecast at $2.41 billion, up 9.9% on a reported basis, 8.1% on an operational basis (at constant exchange rate or CER) and approximately, 6.8% on an organic basis. This reported preliminary revenue figure lies above the Zacks Consensus Estimate of $2.35 billion.

Notably, organic revenue growth excludes the impact of changes in foreign currency exchange rates as well as sales from the recent acquisitions of EndoChoice Holdings and Symetis SA.

For 2017, the company has announced preliminary net sales of $9.05 billion, reflecting 7.9% growth on a reported basis, 7.8% increase on operational basis and a 6.6% rise on an organic basis compared with the prior-year number. The company’s preliminary figure again compares favourably with the Zacks Consensus Estimate of $8.99 billion.


Boston Scientific has three global reportable segments: Cardiovascular, Rhythm Management and MedSurg.

The company generates maximum revenues from its Cardiovascular segment. Per the fourth-quarter preliminary performance, sales from its subsegments, Interventional Cardiology and Peripheral Interventions, are up 6.9% year over year and 6.7%, year over year on operational basis, respectively.

The second largest contributor to Boston Scientific's top line has been Rhythm Management, including Cardiac Rhythm Management (CRM) and Electrophysiology. While CRM reflects a 1.2% year-over-year increase in sales on an operational basis, Electrophysiology sales have shot up 17.7% year over year on an operational basis.

Other segments like Endoscopy, Urology and Pelvic Health plus Neuromodulation (under the MedSurg broader group) also record operational sales growth of 13.1%, 11.3% and 14.6%, respectively.

Share Price Performance

In the past three months, Boston Scientific has been trading below the broader industry. The stock has lost 4.5% compared with the broader industry's 6.2% gain during the period.

Significantly, Boston Scientific's unimpressive pacemaker performance within the core CRM continues to remain a drag. Also, based on the recent announcement, a further delay in relaunching the earlier-recalled Lotus range of heart devices is expected to hamper sales in 2018 as well.

However, a promising 2017 sales announcement is likely to revive the growth trend to a great extent.

We believe that an improving foreign exchange scenario has already started to drive the company’s overall top line. It is also important to note that the company is leaving no stone unturned to strengthen its core business and invest more in the global markets.

Zacks Ranks & Key Picks

Boston Scientific carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO, Centene Corporation CNC and Exelixis Inc. EXEL, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bio-Rad has a projected long-term growth rate of 25%. The stock has rallied 13.4% in the last six months, outperforming the industry’s rise of 6.9%.

Centene has an expected growth rate of 16.4% for 2018. Over the last 30 days, the stock has gained 6.2%, higher than the broader industry’s increase of 1.5%.

Exelixis has an impressive growth rate of 120% for the first quarter of 2018. The stock has soared 64.6% against the industry’s decline of 0.9% in a year.

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