Boston
Scientific
(
BSX
) is scheduled to release its fourth quarter and fiscal 2011
earnings on Thursday, February 2, 2012, before the market opens.
The company is expected to report EPS of 8 cents on revenue of
$1.908 billion for the quarter and EPS of 44 cents on revenue of
$7.662 billion during the fiscal, according to the Zacks Consensus
Estimates.
As per the guidance provided with third quarter results, Boston
Scientific expects to report adjusted EPS of 8-11 cents on revenue
of $1.85−$1.95 billion during the quarter and 44−47 cents on
revenue of $7.624−$7.724 billion during the fiscal.
Previous Quarter Highlights
Boston Scientific reported an EPS of 9 cents during the third
quarter of fiscal 2011 compared with 12 cents in the year-ago
period. However, after considering certain adjustments (other than
amortization expense), the adjusted EPS came in at 10 cents beating
the Zacks Consensus Estimate of 8 cents, but missing the year-ago
quarter's adjusted EPS of 12 cents.
Revenues declined 2% year over year to $1.874 billion during the
quarter and missed the Zacks Consensus Estimate of $1.906 billion.
Excluding the impact of foreign currency and sales from divested
businesses, net sales dropped 3%. Moreover, gross margin declined
to 63.7% from 67.5% in the year-ago quarter.
The company has adopted a restructuring program to strengthen
its operational effectiveness, increase competitiveness and support
new investments. Consequently, about $19 million ($29 million
pre-tax) of restructuring charge was recorded during the
quarter.
Agreement of Analysts
Estimate revision trends among the analysts for the fourth
quarter and the fiscal have been on the downside. Over the last 30
days, out of 22 analysts covering the stock, 5 lowered their
estimates for the quarter while only 1 moved in the opposite
direction. A similar situation applies to the fiscal with 6
downward revisions over the past month and none raising their
estimates.
The decline in estimates reflects the issues troubling the
company's core businesses and the current economic uncertainties.
This is all the more evident in
St. Jude Medical
's (
STJ
) recently reported results. Revenues from its CRM division fell 6%
at constant exchange rates ("CER") year over year to $728 million,
indicating sustained softness in the CRM market.
The US defibrillator market remains an overhang for Boston
Scientific and its peers, St Jude Medical and
Medtronic
(
MDT
). This business has been affected by physician reaction to a study
result published by the Journal of the American Medical Association
regarding evidence-based guidelines for ICD implants and US
Department of Justice's investigation into hospitals' ICD
implants.
However, the company has adopted a restructuring program to
strengthen its operational effectiveness, increase competitiveness
and support new investments. We expect an update from the company
regarding this initiative. Boston Scientific is also looking at
strengthening its foothold in the emerging markets and launching
new products with potential to drive its top line.
Magnitude of Estimate Revisions
For the fourth quarter, estimates have remained unchanged at 8
cents over the last 30 days. For fiscal 2011 however, the consensus
estimate dropped by a penny to the current level of 44 cents per
share over the past 1 month.
Recommendation
Boston Scientific continues to focus on strategic initiatives to
drive growth and profitability. Moreover, the company is working on
strengthening its portfolio and targeting suitable acquisitions in
areas of unmet medical needs. The restructuring initiatives
undertaken should also lead to improvement in the bottom line.
However, we continue to remain concerned about its core business
where the company is witnessing significant pricing pressure and
loss of market share. Besides, economic uncertainty is impacting
procedure volume. Longer term, we have a Neutral recommendation on
Boston Scientific. The stock retains a Zacks #3 Rank ("Hold") in
the short term.
BOSTON SCIENTIF (
BSX
): Free Stock Analysis Report
MEDTRONIC (
MDT
): Free Stock Analysis Report
ST JUDE MEDICAL (
STJ
): Free Stock Analysis Report
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