We recently reinstated our Neutral recommendation on
Boston Scientific Corporation
), a leading medical devices company. After several quarters of
weak performance, we are encouraged with the company's efforts at
revival, as reflected in its improved fourth-quarter 2012 result.
While challenges still remain in the core stent and
defibrillators businesses, we hold a favorable view regarding the
recent update on the company's growth objective with significant
The stock currently carries a Zacks Rank #3 (Hold).
Why at Neutral?
Boston Scientific posted an improved fourth quarter with
adjusted EPS of 11 cents, up 37.5% year over year and in line
with the Zacks Consensus Estimate.
Although revenues declined 1% year over year at constant exchange
rate (or CER) to $1.821 billion, it exceeded the Zacks Consensus
Estimate of $1.760 billion. Further, both top- and bottom-line
results met the company's guided range.
Although Boston Scientific's result remains challenged by
headwinds in its core segments, we are encouraged by the
company's various measures to combat this challenging economic
scenario. In an analyst meet on Feb 12, Boston Scientific came up
with significant new additions and alterations in its growth
According to the company, the earlier growth objectives,
provided in 2010 and considered as "too aggressive", required
alterations since the challenging economic scenario led to a
notable change in the end market. Accordingly, BSX mentioned that
the IC and CRM markets might stabilize over the next 3 years,
leading to a slight improvement in sales (low single-digit
growth). Management also provided an update on its view for the
medium term (2014-2015) and long term (2016-2017).
We believe that a fresh take on growth objectives after a
period of pressurized core business by new management will lead
to a turnaround.. However, as of now, we prefer to remain on the
sidelines until further visibility is obtained in this
Other Stocks to Consider
While we prefer to remain on the sidelines on Boston
Scientific, other medical devices stocks worth a look are
Medical Action Industries Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
BOSTON SCIENTIF (BSX): Free Stock Analysis
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MEDICAL ACTION (MDCI): Free Stock Analysis
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