BSX Still at Neutral - Analyst Blog
We recently reinstated our Neutral recommendation on Boston Scientific Corporation ( BSX ), a leading medical devices company. After several quarters of weak performance, we are encouraged with the company's efforts at revival, as reflected in its improved second-quarter 2013 results.
While challenges still remain in the core stent and defibrillators businesses, we are optimistic about the recent update on the company's growth objective that conveys significant new additions . The stock currently carries a Zacks Rank #2 (Buy).
Why at Neutral?
Boston Scientific reported a strong second quarter with adjusted EPS of $0.18, beating the year-ago adjusted EPS of $0.17 as well as the Zacks Consensus Estimate of $0.16. Revenues were up 2% at CER to $1.809 billion, ahead of the Zacks Consensus Estimate of $1.779 billion.
The top- and the bottom-line results also exceeded the company's guided range. Margin expansion is another upside. Based on these encouraging numbers, BSX raised its 2013 revenue and EPS guidance.
Although Boston Scientific's result remains challenged by headwinds in its core segments, we are encouraged by the company's various measures to combat this challenging economic scenario. Recently, Boston Scientific came up with significant new additions and alterations in its growth objectives.
According to the company, the earlier growth objectives, provided in 2010 and considered "too aggressive", required alterations since the challenging economic scenario led to a notable change in the end market. Accordingly, Boston Scientific mentioned that the Interventional Cardiology (IC) and Cardiac Rhythm Management (CRM) markets might stabilize over the next 3 years, leading to a slight improvement in sales (low single-digit growth). Management also provided an update on its view for the medium term (2014-2015) and the long term (2016-2017).
We believe that a fresh take on growth objectives by new management after a period of pressurized core business will lead to a turnaround. However, as of now, we prefer to remain on the sidelines until further visibility is obtained in this regard.
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