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Here's Why You Should Buy Boston Scientific (BSX) Stock Now
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Boston Scientific (BSX - Free Report) is well-poised for growth in the coming quarters, backed by its successful expansion of operations across different geographies outside the United States. Its recent acquisitions are expected to drive revenue growth in the long term. Strong solvency is also highly encouraging. Meanwhile, headwinds such as adverse macroeconomic impacts and currency movements raise concerns for Boston Scientific.
In the past year, this Zacks Rank #2 (Buy) stock has rallied 48.1% compared with the 3.8% rise of the industry and the 26.1% growth of the S&P 500 composite.
The renowned manufacturer of medical devices and products has a market capitalization of $110.96 billion. BSX projects an estimated 2024 earnings growth rate of 13.2% compared with 12.6% of the industry. BSX surpassed earnings estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.
Let’s delve deeper.
Upsides
Geographic Expansion Continues: In the first quarter of 2024, despite geopolitical weaknesses, the emerging market registered sturdy growth, primarily banking on continued broad-based momentum across the company’s business and investment in this region. The EMEA sales saw a robust performance in Electrophysiology (“EP”) as well as double-digit growth in the Endoscopy, Urology and PI businesses.
Across the portfolio, Boston Scientific particularly saw strength in EP, with continued FARAPULSE account openings and robust utilization in this region. Within the structural heart, the company witnessed strong mid-teen growth in the Valves franchise, led by ACURATE neo2, which continues to see growth from both new and existing accounts.
Within the Asia Pacific, Boston Scientific is particularly registering strong growth in Japan and China. Further, the company is gaining strongly with its Imaging and Complex PCI portfolio.
Image Source: Zacks Investment Research
Impressive Value-Adding Acquisitions: In March 2024, the company acquired the Endoluminal Vacuum Therapy portfolio from B. Braun. In December 2023, Boston Scientific initiated the acquisition of Axonics, a medical technology company that offers innovative devices to treat urinary and bowel dysfunction. With this $3.7-billion acquisition, the company expects to expand its differentiated technologies portfolio within Urology.
In November 2023, BSX acquired Relievant Medsystems, the developer of the FDA-approved Intracept Intraosseous Nerve Ablation System. In April 2023, Boston Scientific closed the Apollo Endosurgery acquisition, which furthers the company’s category leadership within the growing area of endoluminal surgery with differentiated technologies like OverStitch and xTAC. This has also paved the way for the company’s entry into the adjacent endo-bariatric market.
Stable Solvency Structure: Boston Scientific exited the first quarter of 2024 with cash and cash equivalents of $2.33 billion and short-term payable debt of $1.09 billion on its balance sheet. Total debt rose to $10.62 billion from $1.10 billion at the end of the sequentially last reported quarter.
The total debt-to-capital ratio stands at 34.1%, up from 31.8% in the fourth quarter of 2023. The interest coverage of 9% at the first quarter-end is the highest in the past four quarters, buoying optimism.
Downsides
Macroeconomic Headwinds Dent Growth: BSX faces challenges from difficult macroeconomic conditions in the form of geopolitical pressures and global supply chain disruptions. International conflicts have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in price and availability of goods and services are putting pressure on Boston Scientific’s profitability. In the first quarter of 2023, the company reported a 16.3% rise in the cost of products sold, leading to a 67-basis point contraction in the gross margin.
Exposure to Currency Movement: Unfavorable currency movements have been a major dampener for Boston Scientific over the last few quarters, as in the case of other important MedTech players, too. In the first quarter of 2024, the company had a 120-basis point impact on revenues from unfavorable currency fluctuations.
Estimate Trend
The Zacks Consensus Estimate for Boston Scientific’s earnings per share (EPS) has moved upward to $2.32 from $2.29 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $15.9 billion. This suggests a 12.3% rise from the year-ago reported number.
Hims & Hers Health’s earnings are expected to surge 263.6% in 2024 compared with the industry’s 16.9%. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 79.2%. Its shares have surged 86.1% against the industry’s 25.8% decline in the past year.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared with the industry’s 13.4%. Shares of MEDP have rallied 89.2% compared with the industry’s 4.8% rise over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an average earnings surprise of 30.6%.
ResMed, carrying a Zacks Rank #2 at present, has an estimated fiscal 2024 earnings growth rate of 18.6% compared with the industry’s 12.6%. Shares of RMD have fallen 1% compared to the industry’s 3.8% rise over the past year.
RMD’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 2.8%. In the last reported quarter, it delivered an average earnings surprise of 10.9%.
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Here's Why You Should Buy Boston Scientific (BSX) Stock Now
Boston Scientific (BSX - Free Report) is well-poised for growth in the coming quarters, backed by its successful expansion of operations across different geographies outside the United States. Its recent acquisitions are expected to drive revenue growth in the long term. Strong solvency is also highly encouraging. Meanwhile, headwinds such as adverse macroeconomic impacts and currency movements raise concerns for Boston Scientific.
In the past year, this Zacks Rank #2 (Buy) stock has rallied 48.1% compared with the 3.8% rise of the industry and the 26.1% growth of the S&P 500 composite.
The renowned manufacturer of medical devices and products has a market capitalization of $110.96 billion. BSX projects an estimated 2024 earnings growth rate of 13.2% compared with 12.6% of the industry. BSX surpassed earnings estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.
Let’s delve deeper.
Upsides
Geographic Expansion Continues: In the first quarter of 2024, despite geopolitical weaknesses, the emerging market registered sturdy growth, primarily banking on continued broad-based momentum across the company’s business and investment in this region. The EMEA sales saw a robust performance in Electrophysiology (“EP”) as well as double-digit growth in the Endoscopy, Urology and PI businesses.
Across the portfolio, Boston Scientific particularly saw strength in EP, with continued FARAPULSE account openings and robust utilization in this region. Within the structural heart, the company witnessed strong mid-teen growth in the Valves franchise, led by ACURATE neo2, which continues to see growth from both new and existing accounts.
Within the Asia Pacific, Boston Scientific is particularly registering strong growth in Japan and China. Further, the company is gaining strongly with its Imaging and Complex PCI portfolio.
Image Source: Zacks Investment Research
Impressive Value-Adding Acquisitions: In March 2024, the company acquired the Endoluminal Vacuum Therapy portfolio from B. Braun. In December 2023, Boston Scientific initiated the acquisition of Axonics, a medical technology company that offers innovative devices to treat urinary and bowel dysfunction. With this $3.7-billion acquisition, the company expects to expand its differentiated technologies portfolio within Urology.
In November 2023, BSX acquired Relievant Medsystems, the developer of the FDA-approved Intracept Intraosseous Nerve Ablation System. In April 2023, Boston Scientific closed the Apollo Endosurgery acquisition, which furthers the company’s category leadership within the growing area of endoluminal surgery with differentiated technologies like OverStitch and xTAC. This has also paved the way for the company’s entry into the adjacent endo-bariatric market.
Stable Solvency Structure: Boston Scientific exited the first quarter of 2024 with cash and cash equivalents of $2.33 billion and short-term payable debt of $1.09 billion on its balance sheet. Total debt rose to $10.62 billion from $1.10 billion at the end of the sequentially last reported quarter.
The total debt-to-capital ratio stands at 34.1%, up from 31.8% in the fourth quarter of 2023. The interest coverage of 9% at the first quarter-end is the highest in the past four quarters, buoying optimism.
Downsides
Macroeconomic Headwinds Dent Growth: BSX faces challenges from difficult macroeconomic conditions in the form of geopolitical pressures and global supply chain disruptions. International conflicts have increased cybersecurity risks on a global basis. Further, volatile financial market dynamics and significant volatility in price and availability of goods and services are putting pressure on Boston Scientific’s profitability. In the first quarter of 2023, the company reported a 16.3% rise in the cost of products sold, leading to a 67-basis point contraction in the gross margin.
Exposure to Currency Movement: Unfavorable currency movements have been a major dampener for Boston Scientific over the last few quarters, as in the case of other important MedTech players, too. In the first quarter of 2024, the company had a 120-basis point impact on revenues from unfavorable currency fluctuations.
Estimate Trend
The Zacks Consensus Estimate for Boston Scientific’s earnings per share (EPS) has moved upward to $2.32 from $2.29 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $15.9 billion. This suggests a 12.3% rise from the year-ago reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Hims & Hers Health (HIMS - Free Report) , Medpace (MEDP - Free Report) and ResMed (RMD - Free Report) .
Hims & Hers Health’s earnings are expected to surge 263.6% in 2024 compared with the industry’s 16.9%. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 79.2%. Its shares have surged 86.1% against the industry’s 25.8% decline in the past year.
HIMS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared with the industry’s 13.4%. Shares of MEDP have rallied 89.2% compared with the industry’s 4.8% rise over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an average earnings surprise of 30.6%.
ResMed, carrying a Zacks Rank #2 at present, has an estimated fiscal 2024 earnings growth rate of 18.6% compared with the industry’s 12.6%. Shares of RMD have fallen 1% compared to the industry’s 3.8% rise over the past year.
RMD’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 2.8%. In the last reported quarter, it delivered an average earnings surprise of 10.9%.