BSX

PREVIEW-Boston Scientific may be shielded from weight-loss drugs hit by procedure recovery

By Khushi Mandowara and Mariam Sunny

Oct 25 (Reuters) - Boston Scientific's BSX.N quarterly results on Thursday are likely to show the benefits of a rebound in elective procedures and help ease fears that the medical device maker could take a hit from the surging popularity of weight-loss drugs.

Shares across the sector have tumbled in recent months on concerns that popular new GLP-1 drugs, like Novo Nordisk's NOVOb.CO Ozempic and Wegovy, approved to treat diabetes and weight loss, could carve into the market for bariatric surgery and devices used by diabetes patients, among others.

However, Boston Scientific is unlikely to see any pressure in the third quarter or in the near-term from GLP-1s due to its very small bariatric exposure, and a longer-term impact to its heart devices is unclear, analysts have said.

"Boston Scientific is, in our view, the cleanest story in MedTech right now, with arguably less discrete GLP-1 exposure," Truist Securities analyst Richard Newitter said.

THE CONTEXT

U.S. medtech companies have shaken off a pandemic-driven hit to revenues as a rebound in non-urgent procedures such as knee and hip replacements spurred demand for medical devices.

Boston Scientific, which makes a major chunk of its revenue from sales of its heart devices, also makes devices to diagnose and treat a range of gastrointestinal and pulmonary conditions.

Revenues from the company's Endoscopy unit, which includes devices used in surgical procedures that aid in weight loss, contributed 17.5% of the total sales in 2022, according to LSEG data.

Analysts pointed to growing demand for the company's stroke prevention device, branded as Watchman, which is expected to become a blockbuster opportunity in the next few years.

Still, investors will be watching out for comments on the long-term impact of the GLP-1 drugs on its markets.

FUNDAMENTALS

** 24 analysts, on average, forecast Boston Scientific's third-quarter revenue to be $3.48 billion, according to LSEG, compared with $3.17 billion reported a year earlier

** 20 analysts, on average, estimated third-quarter net profit to be $702.6 million, compared with $620 million in the year-ago quarter

WALL STREET SENTIMENT

** Of the 32 analysts covering Boston Scientific, 29 rate it "buy" or higher, three rate "hold"

** The median price target for Boston Scientific is $61, a 19.7% upside to its last closing price on Tuesday.

Boston Scientific's Watchman heart device sales https://tmsnrt.rs/3ShcMvN

Boston Scientific's full-year revenue https://tmsnrt.rs/46K8VM7

(Reporting by Khushi Mandowara and Mariam Sunny in Bengaluru; Editing by Sriraj Kalluvila)

((Khushi.Mandowara@thomsonreuters.com;))

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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