Leading medical devices player Boston Scientific Corporation (BSX) has launched Mustang percutaneous transluminal angioplasty (PTA) balloon catheter (0.035 inch) globally. Introduction of this device could prove beneficial to a huge patient population as according to estimates, about 8−10 million patients in the US suffer from peripheral artery disease (PAD) giving way to blockage in vessels of the peripheral vasculature.
In such cases, PTA balloon catheters come into play in peripheral angioplasty and stenting procedures to open blocked arteries.
This throws some positive light on Boston Scientific, especially after a few product recalls in the recent past. Recently, the company recalled 505 Innova stent systems as they couldn’t be installed properly. This is quite serious as this type of failure may result in vessel wall injury and prolong the procedure time. In some cases it might also lead to emergency surgery for removal of the partially deployed stent.
Boston Scientificalso announced a voluntary recall of its iCross catheters. These catheters are used for intravascular ultrasound (IVUS) imaging for patients about to undergo transluminal coronary interventional procedures. This recall was extended to include Atlantis SR Pro2 catheter, which is distributed outside the US. Boston Scientific had to initiate this recall on reports of catheter tip detachment.
However, the company confirmed that patients who had undergone treatment with the recalled products had nothing to worry as the problem with the catheter would have surfaced during the procedure itself and not later. Boston Scientific has a solution to the problem, which has been submitted to the US Food and Drug Administration (FDA) for approval.
Recommendation
We remain concerned about Boston Scientific’s core businesses, CRM and Cardiovascular, which are witnessing significant pricing pressure and loss of market share. Additionally, economic uncertainty is impacting procedure volume.
Moreover, the sudden decision of Ray Elliott to retire this year will again make the growth path uncertain. However, the company anticipates several new product launches in the coming quarters and consequently some revival in business. Moreover, several acquisitions were made in the recent past to target the areas of unmet medical needs. The restructuring initiatives undertaken should also lead to improvement in bottom line.
We are currently Neutral on the stock, which also corresponds to the Zacks #3 Rank (Hold) in the short term.
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