On May 31, 2018, we issued an updated research report on Boston Scientific Corporation BSX. The company is gaining traction in the emerging markets, particularly in the BRIC zone. However, product recall issue continues to impede growth. The stock carries a Zacks Rank #3 (Hold).
Over the past three months, shares of Boston Scientific have outperformed the industry on several issues. The stock has gained 11.6% versus the industry's 2.1% decline.
Notably, Boston Scientific posted an impressive first-quarter 2018 on the back of growth across all business lines and geographies. The 2018 view also paints a bright picture for the near term.
Boston Scientific is leaving no stone unturned to strengthen its core businesses as well as invest in new technologies. The company achieved clinical milestones for Ranger Drug Coated Balloon and WATCHMAN Left Atrial Appendage Closure device.
Also, post the suspension of Lotus valve in Europe, ACURATE TAVR valve platform continues to build momentum for the company’s growth. During the first quarter, Boston Scientific announced several strategic acquisitions including NxThera and nVision in Urology and Pelvic Health, EmCision in Endoscopy, Securus in Electrophysiology and Millipede in Structural Heart. This inorganic expansion plan bodes well for the stocks’ operational efficiency. Also, a gradually improving foreign exchange scenario has started to contribute to the company’s overall top-line performance.
Boston Scientific is pulling out all the stops to pump its resources into new technologies and global markets, accounting for higher sales across all its geographical regions in the third quarter. Additionally, we are encouraged by the company’s number of approval gains for its products both in the domestic as well as overseas markets.
However, we are concerned about the company’s recall of one of its prime products, Lotus range of heart devices. The fate of Lotus valve issue thrown in the throes of uncertainty for some more time for Boston Scientific. Recently, the company announced a 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 in February 2017.
Per the latest update, the company expects to launch LOTUS Edge in the United States and the European markets not before 2019. We currently fear about the indefinite future of the company’s fast-growing transcatheter aortic valve replacement (TAVR) business within interventional cardiology wherein Lotus valve line is a prime product.
Key Picks
A few better-ranked stocks in the broader medical sector are Intuitive Surgical ISRG, Illumina, Inc ILMN and Amedisys, Inc AMED. While Intuitive Surgical and Illumina sport a Zacks Rank #1 (Strong Buy), Amedisys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an expected long-term earnings growth rate of 12.1%.
Illumina expects long-term earnings growth of 20%.
Amedisys has an expected long-term earnings growth rate of 17.5%.
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