On Jul 9, 2013, Zacks Investment Research downgraded
Boston Scientific Corporation
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Boston Scientific has been witnessing sharp downward estimate
revisions after the company reported dismal first-quarter 2013
results that prompted management to take a conservative stance on
its fiscal sales and earnings outlook.
Over the last 30 and 60 days, out of 11 analysts covering the
stock for the second quarter of 2013, 3 revised estimates
downward with none in the opposite direction. Similarly, 2 and 3
out of 11 analysts covering the stock for 2013 revised estimates
downward over the last 30 and 60 days, respectively, with no
Boston Scientific incurred losses during the first quarter of
2013 due to a challenging economic and competitive environment,
pressure on core segments and a larger-than-expected currency
These factors are expected to adversely impact the company
through the next quarter. Moreover, for full year 2013, the
company lowered its revenue guidance to the band of $6.950 to
$7.150 billion (earlier band being $7.168−$7.243 billion) with
adjusted EPS in the range of 65-70 cents (previously 64-70
Despite Boston Scientific's initiatives to revive its top
line, we remain cautious as the company's core segments, ICDs and
DES (contributing 35% of sales), continued to witness several
headwinds. Due to lower procedure volume and pricing pressure in
the US, the company's share in the defibrillator market dropped
by 100 basis points compared with the year-ago period.
The CRM market is expected to remain sluggish throughout 2013.
The DES business in the US continues to witness pricing pressure,
lower procedural volume and lower penetration rates, although the
situation is improving gradually. As a result, the company's top
line continues to remain under pressure.
Our proven model does not conclusively show that Boston
Scientific is likely to beat earnings this quarter. That is
because a stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
The stock has an ESP of -6.25%.
Zacks Rank #4 (Sell):
Boston scientific's Zacks Rank #4 (Sell) when combined with a
negative ESP makes surprise prediction difficult. We caution
against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks)
going into the earnings announcement, especially when the company
is seeing negative estimate revisions momentum.
Boston Scientific is due to report its second quarter 2013
results in late Jul/early Aug. Currently, the Zacks Consensus
Estimate is pegged at 16 cents per share.
Other Stocks to Consider
Among other stocks in the industry,
Wright Medical Group Inc.
) appear impressive. These stocks carry a Zacks Rank #1 (Strong
NATUS MEDICAL (BABY): Free Stock Analysis
BOSTON SCIENTIF (BSX): Free Stock Analysis
RESMED INC (RMD): Free Stock Analysis Report
WRIGHT MEDICAL (WMGI): Free Stock Analysis
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