BSX Pacemakers OK'd in Europe - Analyst Blog


Boston Scientific Corporation ( BSX ) has strengthened its Cardiac Rhythm Management ('CRM') portfolio in Europe with the launch of Ingenio and Advantio pacemakers and Invive cardiac resynchronization therapy pacemakers (CRT-P). The CE Mark approval and launch of these products confirmed management's prior expectations.

Pacemakers are intended to treat bradycardia, a condition where the heart beats less than 60 times per minute. Both Ingenio and Advantio pacemakers are enabled with RightRate technology, which can treat chronotropic incompetence. This condition is the inability of the heart to regulate its rate appropriately in response to physical activity, which might lead to easy fatigability during daily chores. 

In a scenario when Boston Scientific's core segments of stents and defibrillators are recording lower sales, new product launches might provide some cushion to the struggling top line. The company is also working to launch the next generation Ingenio family of pacemakers in the US by the middle of this year. Besides, launch of pacemakers with additional features such as remote monitoring, advanced heart failure diagnostics and compatibility with magnetic resonance imaging systems is on the anvil, which should further boost sales.

During the last reported quarter, worldwide pacemaker revenue declined 2% year over year to $143 million perpetrated by a 13.5% decline in the US ($64 million) while the international market recorded 7% growth (3% at CER) to $70 million. The robust international performance was based on strong double-digit growth in Japan and intercontinental countries. The company anticipates the growth momentum in Japan to continue based on its agreement with Fukuda Denshi for distribution of CRM products.

Although revival of the top line is not an easy task for Boston Scientific, it is not leaving any stone unturned. Apart from pricing pressure in US and Europe, headwinds such as softness in procedural volume due to economic uncertainties and competitive product launches continue to adversely impact the company. This has affected other players in the MedTech sector as well, such as Medtronic ( MDT ) and St Jude Medical ( STJ ).

The company has resorted to the restructuring route to strengthen its operational effectiveness and efficiency. Although benefits from these programs will not be accrued in the short term, these steps should strengthen the company over the long haul. We are also impressed by the company's focus on the emerging markets of Brazil, India and China that recorded double-digit growth during the latest quarter.

We have a Neutral recommendation on Boston Scientific. The stock retains a Zacks #3 Rank ('Hold') in the short term.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BSX , MDT , STJ

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