Boston Scientific (NYSE:BSX) is set to announce its Q3 earnings on Thursday, October 18. We expect a slight decline in revenues as the company’s key businesses Interventional Cardiology and Cardiac Rhythm Management, and we expect revenue growth in the Endoscopy and Peripheral Interventions businesses to offset some of the declines. For the quarter, we expect gross margins to improve following the company’s cost-cutting efforts in the recent past. We have a $6 price estimate for Boston Scientific, which is about 5% ahead of the market price.
See our complete analysis of Boston Scientific
Revenue Could Decline
On a yearly basis, we expect the company to record a decline in sales in its Interventional Cardiology franchise as it continues to lose market share due to lower demand for its stents and growing competition. However, the recent launch of its own updated version of Promus Element stent, originally licensed from Abbott Labs (NYSE:ABT), could lend support to the division. The Cardiac Rhythm Management business may also witness some weakness due to shrinking demand for its defibrillators.
Margins Could Improve
The company’s cost reduction efforts such as moving manufacturing to lower cost manufacturing facilities in Costa Rica. Lower administrative costs may be visible as an improvement in margins.
The company continues to face short term hiccups following pricing pressures and a strong U.S. dollar. However, we are cautiously optimistic about the company’s long term growth. The company recently announced the acquisition of BridgePoint Medical (Read Boston Scientific Acquires BridgePoint Medical To Bolster Interventional Cardiology Business), which we believe will strengthen and expand the company’s interventional cardiology business.
Further, the company plans to invest in China, one of the world’s fastest growing medical devices markets. We will be closely watching the earnings for any cues if the company has any other acquisition target in its mind.
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