On Aug 21, we upgraded medical device major
Boston Scientific Corporation
) to a Zacks Rank #2 (Buy). The upgrade came on the back of
encouraging second-quarter 2013 results.
Why the Upgrade?
The US defibrillator and stent markets have remained major
overhangs over the past several quarters. Despite several
initiatives undertaken by the company to revive its top line, we
remain cautious as its core segments, implantable cardioverter
defibrillator and DES (contributing 35% of sales) are still
taking a toll on the numbers.
Despite challenging economic conditions, competitive
environment, pressure on core segments and a larger-than-expected
currency headwind, Boston Scientific posted solid second-quarter
2013 results, which beat on both lines. Margin expansion is
another upside. Based on these encouraging numbers, the company
raised its 2013 revenues and EPS guidance.
Moreover, Boston Scientific is resorting to all available
means in order to return to growth. The company has a strong
pipeline of products under development. The launch of these
products should drive the top line. We are encouraged by the
focus on emerging markets, especially India and China. Boston
Scientific plans to invest approximately $150 million in China
over the next 5 years to build a local manufacturing
The stronger-than-anticipated results triggered an uptrend in
the Zacks Consensus Estimate, as analysts become more
constructive on the stock's future performance. The Zacks
Consensus Estimate increased 3.0% to 69 cents for 2013 and 4.1%
to 76 cents per share for 2014 in the past 30 days.
Other Stocks to Consider
Apart from Boston Scientific, the other stocks worth
considering in the MedTech industry include
Gilead Sciences Inc.
), all carrying a Zacks Rank #1 (Strong Buy).
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