) is scheduled to release its third quarter of 2012 earnings on
Thursday, October 18, 2012, before the market opens. The company is
expected to report earnings of 11 cents on revenue of $1.761
billion for the quarter, according to the Zacks Consensus
As per the guidance provided for the third quarter results,
Boston Scientific expects to report adjusted earnings of 8-11 cents
on revenue of $1.725−$1.825 billion during the quarter.
Previous Quarter Highlights
Boston Scientific reported a net loss of $3.4 billion or $2.39
per share in the second quarter of 2012, a disappointing result
from net income of $146 million or earnings of 10 cents per share
in the year-ago period. This was primarily due to an estimated
impairment charge of $3.405 billion or $2.38 per share related to
the company's Europe, Middle East and Africa reporting unit. This
segment was affected by the lower projected long-term growth rates
due to macroeconomic factors and its impact on the European
After considering certain adjustments (other than amortization
expense), earnings in the second quarter came in at 11 cents per
share, in line with the Zacks Consensus Estimate and a penny below
the year-ago quarter's adjusted earnings.
Revenues declined 7% year over year (5% at constant currency) to
$1.828 billion during the second quarter of 2012, lagging the Zacks
Consensus Estimate of $1.884 billion. Excluding the impact of
divested businesses and at constant currency, net sales dropped
Agreement of Analysts
Estimate revision trends for the third quarter have been mixed.
Over the last 30 days, out of the 19 analysts covering the stock,
one was negative for the quarter, while one moved in the opposite
direction. While estimate revision for 2012 has been insignificant
with only one positive revision, the situation improved marginally
for 2013. Three upward estimate revisions are countered by two
downward revisions over the past month.
The cautious sentiment reflects the issues upsetting the
company's core businesses of stents and defibrillators
(contributing approximately 40% of sales) and the current economic
As a result of the continued trend of lower procedure volume and
pricing pressure in the US, the company's share in the
defibrillator market dropped by 100 basis points compared to the
year-ago period. The US defibrillator market remains an overhang
for Boston Scientific and its peers,
St Jude Medical
).The drug eluting stent ('DES') business in the US witnessed
challenges due to pricing pressure, lower procedural volume, lower
penetration rates and share losses from the launch of Medtronic's
Resolute Integrity stent with April being affected the most.
However, stability is expected in the second half with the
abatement of competitive product trialing, the launch of longer
lengths of Promus Element Plus stent (32mm and 38mm) and trial data
favoring Promus Element.
Magnitude of Estimate Revisions
For the third quarter and 2012, estimates have remained
unchanged at 11 cents and 42 cents, respectively, over the last 30
days. For 2013 however, the consensus estimate increased by a
couple of cents to the current level of 48 cents per share over the
Boston Scientific continues to focus on strategic initiatives to
drive growth and profitability. These include strengthening its
portfolio, targeting suitable acquisitions in areas of unmet
medical needs and focus on emerging markets. We are encouraged by
the recent US approval of its subcutaneous implantable cardioverter
defibrillator, the S-ICD system.
Boston Scientific plans to invest approximately $150 million in
China, one of the world's fastest growing and largest medical
devices markets, over the next 5 years to build a local
manufacturing operation. This would cater to the Chinese market and
help develop a training center for healthcare providers.
The company also recently announced the proposed acquisitions of
Rhythmia Medical and BridgePoint Medical. While the former would
strengthen the company's foothold in the electrophysiology ablation
business, the latter would bring in a catheter-based system to
treat coronary chronic total occlusions. We are impressed with
Boston Scientific's recent acquisitions, which reflect its focus on
new therapies to drive the top line.
We expect these factors to benefit the company over the long
term and as such we have a Neutral recommendation on Boston
Scientific. The stock retains a Zacks #3 Rank ("Hold") in the short
BOSTON SCIENTIF (BSX): Free Stock Analysis
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