On Jun 3, 2015, we issued an updated research report on leading medical devices company Boston Scientific Corporation BSX. Amid challenging economic conditions, competitive environment and currency headwinds, Boston Scientific posted a disappointing first quarter of 2015, with earnings barely meeting the Zacks Consensus Estimate and revenues missing the benchmark. The trimmed 2015 revenue guidance was primarily in consideration of a severe foreign exchange headwind faced during the quarter that is likely to stay, going ahead. The stock currently carries a Zacks Rank #3 (Hold).
Nevertheless, Boston Scientific continues to strengthen its core businesses and invest in new technologies and global markets, which accounted for the sales upside across all its businesses and regions in the reported quarter.
An important aspect of the company’s growth strategy is to continue pursuing development opportunities outside the U.S. by expanding global presence, inclusive of the emerging markets. In Apr 2015, Boston Scientific entered into a strategic alliance with Frankenman Medical Equipment Company, a major entity with deep local market expertise in the China surgical devices market. According to Boston Scientific, this joint venture will allow both players to reach out to more clinicians and patients in China, where the company witnessed revenue growth of 25% in the reported quarter.
Boston Scientific’s partnership agreement with C.R. Bard, inked in the first quarter, is also worth a mention. Per the deal, the company will distribute the Bard’s Lutonix Drug Coated Balloon in the U.S. for the treatment of peripheral artery disease.
We are also looking forward to the completion of Boston Scientific’s buyout of the American Medical Systems (AMS) urology portfolio from Endo International. Boston Scientific expects the inclusion of the AMS portfolio will nearly double the size of the company’s urology business to $1 billion. The deal is expected to bring in significant synergies and solid growth prospects through portfolio innovation and international market expansion.
Furthermore, Boston Scientific has a strong pipeline of products under development, the launch of which should drive the top line, moving ahead. We are optimistic about the company’s gradually improving performance in Interventional Cardiology, led by an innovative portfolio and robust execution by global commercial teams.
Key Picks in the Sector
Better-ranked medical product stocks that warrant a look include Bio-Rad Laboratories, Inc. BIO, Hospira Inc. HSP and Vascular Solutions Inc. VASC. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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