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Boston Scientific Stock Dips on Dull Preliminary Q4 Results

Zacks Equity Research

Boston Scientific Corporation BSX announced preliminary revenue results for the fourth quarter and 2019. The company is slated to release its detailed financial results for the period on Feb 4.

Per the announcement, Boston Scientific’s organic revenue growth rates for both fourth-quarter and 2019 are expected to be below the earlier provided figures. This fails to instill investors’ confidence, which is reflected through a 6.2% dip in stock price that reached $42.66 on Jan 14 at the closing.

For the to-be-reported quarter, Boston Scientific expects total revenue growth of 13.4% to $2.90 billion from the year-ago reported figure, indicating 14.1% rise on an operational basis and 7.3% improvement on an organic basis. Notably, the company’s expectation for the same is below the Zacks Consensus Estimate of $2.92 billion. The preliminary figures are near the low end of the company’s guidance of 13-15% (reported basis), 14-16% (operational basis) and 8-9% (organically).

 

 

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Per Boston Scientific, revenues in the fourth quarter improved in all segments, except for Specialty Pharmaceuticals. Data for the Specialty Pharmaceuticals is unavailable due to its integration, since the BTG acquisition in August 2019.  Excluding acquisitions and divestitures, the company's total revenues are predicted to increase 6.8%.

For the year, Boston Scientific expects a 9.3% year-over-year improvement in total revenues to $10.74 billion, suggesting 11.1% rise on an operational basis and a 7.3% increase on an organic basis. Notably, the company’s expectation for the same is marginally above the Zacks Consensus Estimate of $10.73 billion. For 2019, revenues in all the reported segments were strong, except for Specialty Pharmaceuticals.

Segmental Expectations

For the fourth quarter, MedSurg (30.8% of total revenues) is likely to rise 9.8% on a reported basis, and 10.6% on both operational (excluding currency fluctuation) and organic basis.

Rhythm and Neuro (29.2% of total revenues) is likely to rise 3.5% on a reported basis, 4.1% on an operational basis and 1% on an organic basis.

Cardiovascular (39.2% of total revenues) is likely to rise 18.7% on a reported basis, 19.3% on an operational basis and 10% on an organic basis.

Per the company’s updated outlook, earnings per share (EPS) on a reported basis are likely to exceed 22-25 cents mentioned earlier for the fourth quarter and 72-75 cents stated previously for the year.

The adjusted EPS, excluding certain charges (credits), is likely to be within the company’s guidance of 42-45 cents and $1.55-1.58 for the fourth quarter and 2019, respectively.

Price Performance

Shares of Boston Scientific have gained 16.5% in the past year compared with the industry’s 15.2% growth.

Zacks Rank & Key Picks

Currently, Boston Scientific carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, Hill-Rom Holdings, Inc. HRC and Medtronic plc MDT.

Haemonetics, currently flaunting a Zacks Rank #1 (Strong Buy), has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hill-Rom’s long-term earnings growth rate is estimated at 11.7%. The company presently carries a Zacks Rank #2 (Buy).

Medtronic’s long-term earnings growth rate is estimated at 7.4%. It currently carries a Zacks Rank #2.

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