Will Boston Scientific (BSX) Earnings Surprise Investors in Q2? - Analyst Blog

Boston Scientific CorporationBSX is scheduled to report its second-quarter 2015 results before the opening bell on Jul 23. Last quarter, the company had posted in-line earnings. Nevertheless, the four-quarter trailing average beat is pegged at 2.44%. Let's see how things are shaping up for this announcement.

Factors at Play

Pricing pressure has been a drag for Boston Scientific over the past several quarters. The company projects downward pricing pressure through the rest of 2015. Although the company expects this headwind to be offset by improved price management, principally through market segmentation, tiered offerings and standard cost reduction programs, the benefit should come into effect only in the second half of 2015.

During its first quarter earnings call, Boston Scientific had provided its guidance for the second quarter of 2015. Adjusted earnings are expected in the band of 20-22 cents per share on revenues of $1.800−$1.850 billion. The Zacks Consensus Estimate for EPS stands at 22 cents, while that for revenues is $1.854 billion.

Unfavorable currency movement is expected to be a major dampener even in the second quarter. The company had estimated foreign exchange impact to the tune of approximately $140 million or 750 basis points, relative to the second quarter of 2014.

Over the recent past, Boston Scientific has been targeting product launches to revive sales in its core segments. However, ahead of the key product launches lined up for the second half of 2015, adjusted gross margin for the second quarter is expected in the range of 70.5% to 71.5%. Additionally, assuming a more normalized adjusted R&D expense, Boston Scientific expects adjusted operating margin to range between 21% and 22% in the second quarter.

We are also optimistic about the company's gradually improving performance in Interventional Cardiology, led by an innovative portfolio and execution of global commercial teams. The company continues to gain share in a number of cardiovascular segments and DES, as a differentiated platform of premier and synergy, continues to build momentum globally and gain worldwide share.

MedSurg, which had posted 4% growth in the last reported quarter, is expected to demonstrate consistent performance led by endoscopy. Urology and Women's Health are also estimated to grow above market on the back of investment strategies in key international geographies.

Earnings Whispers

Our proven model does not conclusively show that Boston Scientific is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Boston Scientific's earnings ESP is 0.00%, since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 21 cents.

Zacks Rank: BostonScientific has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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:

HCA Holdings, Inc. HCA has an earnings ESP of +2.24% and a Zacks Rank #2 (Buy). HCA Holdings is slated to report its second-quarter 2015 earnings on Aug 5.

Amedisys Inc. AMED has an earnings ESP of +3.03% and a Zacks Rank #1 (Strong Buy). Amedisys is expected to report its second-quarter earnings on Jul 29.

Chimerix, Inc. CMRX has an earnings ESP of +5.09% and a Zacks Rank #2. Chimerix is set to report its second-quarter earnings on Aug 6.

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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.

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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