Earnings Preview: Boston Scientific - Analyst Blog

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Boston Scientific ( BSX ) is scheduled to release its first quarter fiscal 2012 earnings on Thursday, April 19, 2012, before the market opens. The company is expected to report earnings per share ("EPS") of 8 cents on revenue of $1.858 billion for the quarter, according to the Zacks Consensus Estimate.

The company's guidance for the quarter is adjusted EPS of 5-8 cents on revenue of $1.825−$1.90 billion. For the fiscal, the company expects revenue and adjusted EPS in the range of $7.3−$7.7 billion and 36−46 cents, respectively.

Prior-Quarter Highlights

Boston Scientific reported an EPS of 7 cents during the fourth quarter of fiscal 2011 compared with 20 cents in the year-ago period. However, after considering certain adjustments (other than amortization expense), the adjusted EPS came in at 8 cents, in line with the Zacks Consensus Estimate, but lower than the year-ago quarter's adjusted EPS of 12 cents. For the fiscal, the adjusted EPS of 45 cents beat the Zacks Consensus Estimate by a penny and the prior year's 42 cents.

Revenues declined 8% year over year to $1.848 billion during the fourth quarter 2011 and missed the Zacks Consensus Estimate of $1.908 billion. Excluding the impact from divested businesses and at constant exchange rates (CER), net sales dropped 5%. For the full year, sales dropped 2% (5% at CER) to $7.622 billion, nominally missing the Zacks Consensus Estimate of $7.662 billion.

Agreement of Analysts

The US defibrillator market continues to remain an overhang for Boston Scientific and its peers, St Jude Medical ( STJ ) and Medtronic ( MDT ). Despite the sustained softness in this market for the past couple of quarters, analysts have stuck to their estimates, indicating a more or less in line quarter.

The state of affairs will be reflected in St Jude Medical's earnings, scheduled for release on April 18, before the market opens.

In the last quarter, Boston Scientific noted some signs of stabilization in the US defibrillator market though it preferred to wait for two more quarters to reaffirm the trend. 

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. 

Some of the recent achievements include the launch of Ingenio and Advantio pacemakers and Invive cardiac resynchronization therapy pacemakers (CRT-P) in Europe; approval from Health Canada for its Blazer Open-Irrigated, radiofrequency ablation ("RFA") catheter and favorable reimbursement decision from two private insurance players and Medicare for its bronchial thermoplasty ("BT") procedure performed using the Alair BT system. Besides, the company is in the process of acquiring privately held, California based Cameron Health for an upfront payment of $150 million. The company is expected to provide an update regarding pipeline development and acquisition strategy during the conference call.

Magnitude of Estimate Revisions

For the current quarter, estimates have remained static at 8 cents over the last 30 days. However, the estimate for fiscal 2012 has dropped by a penny to 41 cents over the past 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BSX , MDT , STJ

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