Boston Scientific's (BSX) Watchman US Sale to Aid Q1 Earnings

Boston Scientific Corporation BSX is scheduled to report first-quarter 2021 results on Apr 28, before the opening bell.

In the last reported quarter, the company’s earnings per share of 23 cents missed the Zacks Consensus Estimate by 25.81%. It beat estimates in two of the trailing four quarters and missed in two. The trailing four-quarter average earnings surprise was 76.76%.

Factors at Play

Top-line growth is likely to have improved sequentially with Boston Scientific appropriately investing in virtual physician education, remote clinical support and digital sales enablement, suitable for healthcare support amid the pandemic. Per the company’s February update, with all these, it has already seen strong region-wise recovery.

On a geographic basis, in Q1, organic sales in the United States are once again expected to have been impacted by the sales return reserve related to conversion to a consignment inventory model for the next-generation WATCHMAN FLX device in this region. Internationally, emerging market sales are expected to have been negatively impacted by the ongoing DES tender sales return reserves in China.

Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation price-eps-surprise | Boston Scientific Corporation Quote

Within Interventional Cardiology (IC) business, WATCHMAN FLX conversion-related issue as stated earlier might have hurt Q1 top line. However, the U.S. launch of WATCHMAN FLX remained successful with positive physician feedback on device performance and safety, a higher-than-expected conversion rate and a shift to a consignment model. This should have strongly contributed to the company’s Q1 top line.

Added to this, in November, the company initiated a global, voluntary recall of all unused inventory of the LOTUS Edge Aortic Valve System. The company earlier stated that although there will be no material charges related to LOTUS discontinuation in 2021, there will be a headwind of $62 million from LOTUS Edge sales loss in this year. This is likely to be reflected in the first-quarter results.

Within coronary therapies, drug-eluting stents continued to be a challenge from a pricing standpoint. However, new product launches such as SYNERGY XD and MEGATRON are expected to have contributed to the top line.

Within the Peripheral Interventions (PI) business, first-quarter sales are expected to be more resilient to the pandemic, banking on favorable mix of high acuity and outpatient site of care for procedures, as well as a category-leading portfolio and strong cadence of new product launches.

Further, a higher mix of non-deferrable procedures including high acuity portfolio and a broad cadence of new product launchesare expected to have aided the company’s fourth-quarter MedSurg sales.

Within Urology/ Pelvic Health, sales from the company’s LithoVue, SpaceOAR and Rezum product lines are expected to have performed better.Boston Scientific continues to expect urology/pelvic health to have one of the faster potential recovery curves, aided by a higher office ASE mix for most elective procedures.

Within Endoscopy, broad-based recovery across regions and growing strength in infection prevention are expected to have helped drive revenues in Q1.

Within Neuromodulation, the company is expected to have registered balanced procedure recovery across RF (radiofrequency), Vertiflex and Spinal Cord Stimulation banking on strong execution of category leadership strategy in pain.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter total revenues of $2.61 billion suggests improvement of 2.8% from the prior-year reported number. The consensus mark for adjusted earnings of 30 cents per share implies 7.1% rise from the year-ago reported figure.

What Our Quantitative Model Predicts

Per our proven model, a stock with a combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a good chance of beating estimates. This is exactly the case here as you can see:

Earnings ESP: Boston Scientific has an Earnings ESP of +5.20%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Boston Scientific carries a Zacks Rank #3.

Other Stocks to Consider

Here are a few medical stocks worth considering as these also have the right combination of elements to beat on earnings this time around.

Elanco Animal Health Incorporated ELAN currently has a Zacks Rank #2 and an Earnings ESP of +1.90%.  You can see the complete list of today’s Zacks #1 Rank stocks here.

HCA Healthcare, Inc. HCA has an Earnings ESP of +8.91% and a Zacks Rank of 2, at present.

Avenue Therapeutics, Inc. ATXI has an Earnings ESP of +16.67% and a Zacks Rank of 2, at present.

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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 Nasdaq, Inc.

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