Boston Scientific Remains Neutral - Analyst Blog
May 20 2011 - 10:15AM
Zacks
Recently, we reiterated our Neutral
recommendation on Boston Scientific Corporation
(BSX) with a target price of $7.25.
Boston Scientific reported an
adjusted EPS of 15 cents beating the Zacks Consensus Estimate of 4
cents and the year-ago quarter’s 9 cents. The reported quarter
witnessed a $759 million ($530 million after tax) gain on the sale
of the Neurovascular business to Stryker
Corporation (SYK). Moreover, having witnessed a reduction
in the estimated size of the US CRM market, the company recorded a
$723 million of goodwill impairment charge associated with its US
CRM business unit during the quarter.
Revenues of $1.925 billion declined
2% year over year and surpassed the Zacks Consensus Estimate of
$1.898 billion. However, excluding the impact of foreign currency
and sales from divested business, net sales dropped 1%.
In the past few months, Boston
Scientific undertook some of its ‘priority growth initiatives’ that
complements its CRV model. The acquisition of Sadra Medical and
Atritech played key roles in the realignment of portfolio targeted
towards structural heart therapy and atrial fibrillation,
respectively.
In May 2011, the company launched
Energen and Punctua CRT-Ds and ICDs in Europe and other overseas
markets. The launch of these products in the US is expected in late
2011 or early 2012. Moreover, launch of the next generation Ingenio
wireless pacemaker is expected in the second half of 2011. We
believe that these launches will strengthen Boston Scientific’s
position in the CRM market.
Having established a strong
foothold in the US and Europe, Boston Scientific is looking at
establishing its presence in the emerging and under-penetrated
markets of Brazil, India and China, which offer plenty of growth
potential. The company plans to invest $30-$40 million in these
regions through 2011. Furthermore, the company has strengthened its
sales force in India and China and has added 100 representatives
during the quarter in these two countries alone.
Pricing pressure in the US and
Europe has been an issue for the past few quarters. Additional
challenges concerning the company are softness in procedural
volume, delays in new products and competitive product launches.
The weak economy impacted the elective procedures leading to the
decline in procedural volumes in non-stent interventional
cardiology and Electrophysiology businesses.
While Boston Scientific made
significant achievements under the leadership of Ray Elliott, there
are various unresolved issues. As a result, his decision to retire
will give rise to some uncertainty. Moreover, the competitive
landscape is tough with the presence of St. Jude
Medical (STJ) and Medtronic (MDT).
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
STRYKER CORP (SYK): Free Stock Analysis Report
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