Boston Scientific Corporation
) is scheduled to report its second-quarter 2014 results
before the opening bell on Jul 24. Last quarter, the company had
posted a positive earnings surprise of 11.11%. Moreover, the
four-quarter trailing average beat is pegged at 10.10%. Let's see
how things are shaping up for this announcement.
Factors at Play
Amid challenging economic conditions, competitive environment,
pressure on core segments and a larger-than-expected currency
headwind, Boston Scientific posted mixed first-quarter 2014 results
beating on earnings but missing revenues.
At the same time, the company also provided its outlook for the
second quarter. Boston Sientific expects adjusted earnings to
remain in the band of 18-20 cents per share while revenues are
projected in the range of $1.84-$1.89 billion. In addition, gross
margin will likely remain in the range of 70−71%. Selling, general
and administrative as well as research and development expense
margins are expected to be within 36.5%−37.5%, and 11.5%−12%,
respectively, resulting in a targeted operating margin of 19% to
Despite several initiatives undertaken by Boston Scientific to
revive its top line, we remain cautious as core segments like
Cardiac Rhythm Management (CRM) and drug-eluting stents (DES)
continue to witness several headwinds. The current challenging
scenario fails to give any assurance that the size of the CRM and
DES markets will increase above existing levels or the company will
be able to increase its market share or net sales in these segments
in the near term.
Meanwhile, Boston Scientific is resorting to all available means
in order to return to growth. To revive its top line, the company
is focusing on strategic initiatives to drive growth and
profitability. These include the recently announced restructuring
initiatives, strengthening of the company's portfolio, targeting
suitable acquisitions in areas of unmet medical needs, and focusing
on emerging markets.
Boston Scientific has a strong pipeline of products under
development, the launch of which should drive the top line. We are
also encouraged by the focus on emerging markets, especially India
Our proven model does not conclusively show that Boston
Scientific is likely to beat earnings this quarter. It is because a
stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Boston Scientific's Earnings ESP is 0.00%, since both the Most
Accurate estimate and the Zacks Consensus Estimate stand at 20
Boston Scientific's Zacks Rank #3 (Hold) when combined with a 0.00%
ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
Other Stocks to Consider
Here are three companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Wright Medical Group Inc.
has an earnings ESP of +2.22% and a Zacks Rank #1 (Strong Buy).
Wright Medical will be reporting second-quarter earnings on Aug
has an earnings ESP of +1.79% and a Zacks Rank #2 (Buy). Hospira
will report second-quarter earnings on Jul 30.
Community Health Systems, Inc.
has an earnings ESP of +2.94% and a Zacks Rank #3 (Hold). Community
Health will be reporting second-quarter earnings on Aug 1.
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BOSTON SCIENTIF (BSX): Free Stock Analysis
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