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Boston Scientific (BSX) Gains From Acquisitions, New Launches

Boston Scientific BSX is gaining traction in emerging markets. Also, accretive acquisitions and significant progress in the company’s restructuring initiatives buoy optimism. The stock carries a Zacks Rank #2 (Buy).

Over the past year, Boston Scientific has outperformed the industry it belongs to. The stock has gained 34.5% as against the industry’s 29.6% plunge.

Boston Scientific ended the first quarter of 2023, with better-than-expected earnings and revenues. The company registered a year-over-year improvement in organic sales, indicating a strong rebound in the legacy business even amid several macroeconomic issues. Organic revenues at each of its core business segments and geographies were up in the reported quarter.

Geographically, the United States grew 13% year over year operationally, inclusive of a 140 basis-point tailwind from the Baylis acquisition with notable organic strength across each business unit. Europe, Middle East and Africa (EMEA) grew 20% on an operational basis, with nearly every market growing double digits in the quarter. This strong above-market growth is driven by Boston Scientific’s diverse portfolio, new launches and commercial execution with healthy underlying market demand.

The company remains excited about the year ahead and expects to continue to outpace its peers within the EMEA market. Asia Pacific grew 15% operationally, with broad-based strength across all major markets and business units. During the first quarter, the company received health sciences authority approval for FARAPULSE in Singapore. In Japan, first-quarter growth was fueled by the launch of AGENT Drug-Coated Balloon. China also grew in double digits in the first quarter, ahead of the company’s expectations, with solid procedural demand as hospitals work through COVID delayed procedures.

Boston Scientific Corporation Price

Boston Scientific Corporation Price
Boston Scientific Corporation Price

Boston Scientific Corporation price | Boston Scientific Corporation Quote

The raised 2023 guidance seems bullish, indicating that the company is well-poised to handle the industry-wise trend of currency headwinds and global inflationary pressure.

On the flip side, continued foreign exchange headwinds largely offset Boston Scientific’s top-line performance. During the first quarter of 2023, the company’s revenues reflected a $88 million headwind from foreign exchange with continued volatility in foreign exchange rates throughout the quarter. On an operational basis, the company’s revenues had a 290-basis point headwind from foreign exchange.

Further, Boston Scientific witnessed significant cost pressure. There was an 8.9% rise in the cost of products sold. Selling, general and administrative expenses rose 14.6%, while Research and development expenses rose 5.6%. Considering the industry-wide trend, Boston Scientific continues to expect 2023 gross margin to include a similar level of macroeconomic and supply chain headwinds.

Further, the presence of a large number of players has made the medical devices market highly competitive. The company participates in several markets, including Cardiovascular, CRM, Endosurgery and Neuromodulation, where it faces competition from large, well-capitalized companies such as Johnson & Johnson, Abbott, Medtronic, Stryker, Smith & Nephew and Edwards Lifesciences, apart from several other smaller companies.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Zimmer Biomet ZBH, Penumbra PEN and Hologic, Inc. HOLX.

Zimmer Biomet, sporting a Zacks Rank #1 (Strong Buy) at present, has an earnings yield of 5.42% compared to the industry’s -1.86%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Zimmer Biomet shares have increased 11.9% against the industry’s 29.6% decline in the past year.

Penumbra, sporting a Zacks Rank #1 at present, has an estimated growth rate of 64.1% for 2024. Penumbra shares have risen 123.7% compared with the industry’s 2.3% increase over the past year.

PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.68% compared to the industry’s -7.62%. Shares of HOLX have risen 3.6% compared with the industry’s 2.4% growth over the past year.

Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.

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Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Hologic, Inc. (HOLX) : Free Stock Analysis Report

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Penumbra, Inc. (PEN) : Free Stock Analysis Report

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