On Sep 4, 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 as well as the company's
multiple initiatives to expand electrophysiology (EP)
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 the challenging economic conditions, a 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
Moreover, Boston Scientific is resorting to all available
means in order to return to growth. The company has taken several
steps toward strengthening its foothold in the $2.5 billion
global electrophysiology market. Last month, the company gained
approval from the Food and Drug Administration (FDA) for its
IntellaTip MiFi XP catheter. In addition, its other EP device
Zurpaz 8.5F steerable sheath managed to gain 510(k)
In July, the company announced its plan to acquire Bard EP,
the electrophysiology business of
), for $275 million. The acquisition is expected to close in the
second half of 2013.
We are optimistic about Boston Scientific's recent endeavors
and expect these to create a competitive edge for the company in
the fast-growing electrophysiology market. This strategy is
significant given the poor performance of its core segments of
stents and defibrillators.
We are also 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 operation.
The stronger-than-anticipated results triggered an uptrend in
the Zacks Consensus Estimate, as analysts became 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 60 days.
Other Stocks to Consider
Apart from Boston Scientific, other stocks worth considering
in the MedTech industry are
), all carrying a Zacks Rank #1 (Strong Buy).
AFFYMETRIX INC (AFFX): Free Stock Analysis
ALERE INC (ALR): Free Stock Analysis Report
BARD C R INC (BCR): Free Stock Analysis
BOSTON SCIENTIF (BSX): Free Stock Analysis
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