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WATCHMAN to Aid Boston Scientific (BSX) Q1 Earnings Amid Woes

Zacks

Boston Scientific Corporation BSX is scheduled to report first-quarter 2018 results before the opening bell on Apr 25.

Last quarter, the company delivered earnings in line with the Zacks Consensus Estimate. However, the average trailing four-quarter earnings surprise is pegged at -0.03%.

Let’s see, how things are shaping up prior to this announcement.

Key Catalysts


Within structural heart, we are looking forward to Boston Scientific’s WATCHMAN, ACURATE, and IRIS product lines, expected to strongly contribute to the company’s top line in the yet-to-be-reported quarter. Earlier, the company stated that in2018, it expects revenues from WATCHMAN and ACURATE TAVR franchise to gross approximately $400 million.

We are optimistic about the gradually improving performance in Interventional Cardiology (IC), led by an innovative portfolio and robust commercial teams, globally. More specifically, the company has of late, successfully gained within this business on strong sales of WATCHMAN Left Atrial Appendage Closure device and its portfolio of complex PCI (percutaneouscoronary intervention) products.

The WATCHMAN platform is anticipated to experience another excellent quarter on consistent global momentum as Boston Scientific’s multiple market development efforts continue to push for growth.

This apart, new launches within IC business like the WOLVERINE cutting balloon and the company’s next-generation rotational atherectomy platform called ROTAPRO, are likely to strongly contribute to the top line in the upcoming quarter.

We are also upbeat about the company’s ACURATE (TAVR (transcatheter aortic valve replacement) program, which has recently completed training of European sales and clinical teams.

However, ahead of the company’s earnings release for the first quarter, we believe its IC business to be once again deeply impacted by the product recall issue within Europe. Notably, the company has recently announced a further delay in its earlier-reported timelines for the commercial return of the LOTUS Edge Aortic Valve System in Europe as well as the United States, following the product’s voluntary recall, last February.

Other Factors at Play

Among the segments, MedSurg is estimated to demonstrate a steady performance, led by endoscopy. Urology and Women’s Health are also projected to grow beyond market levels, driven by investment strategies in the key international geographies.

However, the company is expected to face some downsides within this business too in the yet-to-be-reported quarter. These headwinds may come in the form of year-over-year difficult pacer comparisons and more competitions in the drug eluting stent space with some new entrants.

Overall, the Zacks Consensus Estimate for first-quarter endoscopy revenues is pegged at $420 million, 8.5% above the prior-year quarter’s reported count of $387 million. For Urology and Women’s Health, the consensus mark of $289 million remains 9.1% ahead of the year-earlier quarter’s reported tally of $265 million.

On the flip side, severe currency headwinds that Boston Scientific have been facing of late, remain a concern. In fact, as the company records 47% of its sales from the international markets, it gets highly exposed to currency fluctuations. This apart, although immaterial for the to-be-reported quarter, the ongoing tensions between the United States as well as China regarding the imposition of tariffs on imports, have raised concerns for major MedTech players as any adverse move might affect the top-line numbers in the future.

Here’s What Our Quantitative Model Predicts

Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP.

Boston Scientific has a Zacks Rank #3, which increases the predictive power of ESP and an Earnings ESP of 0.00%, which makes surprise prediction difficult. Together, the combination does not suggest that the company is likely to beat on earnings this quarter.

We caution against the Sell-rated stocks (4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Worth a Look

Here are a few medical stocks worth considering with the right combination of elements to beat estimates this time around.

Myriad Genetics, Inc. MYGN has an Earnings ESP of +0.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, Inc. HSIC has an Earnings ESP of +3.34% and a Zacks Rank of 3.

Quest Diagnostics Incorporated DGX has an Earnings ESP of +3.19% and is a Zacks #3 Ranked player.

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