New Product Launches Likely Drove Growth For Boston Scientific In Q4

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Leading medical device maker Boston Scientific (NYSE:BSX) is set to report the earnings for Q4 2015 on February 4th. Boston Scientific’s growth in Q4 likely came from the Synergy bio-absorbable polymer drug-eluting stents, the WATCHMAN left atrial appendage closure device, and the expansion of its urology portfolio via acquisitions. Being the first to get FDA approval for a bio-absorbable polymer drug-eluting stent, the company has a huge opportunity to gain share in the interventional cardiology market in the U.S., the largest coronary stent market. Further, Boston Scientific’s strong product pipeline for 2016 can boost its performance in the coming year.

However, Boston Scientific has run into some issues and allegations regarding its transvaginal mesh devices, which could impact its results going forward. Although the company didn’t likely see any monetary impact from these issues in Q4, it could potentially incur large legal charges in the coming quarters.

Our price estimate of $15 for Boston Scientific is approximately 15% below the current market price.

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See our complete analysis for Boston Scientific here

Strong Product Pipeline To Boost Performance In 2016

Although Boston Scientific likely saw softness in CRM (cardiac rhythm management) sales in Q4 due to replacement cycle headwinds and competition, the company anticipates the division’s growth to pick up in 2016 from the launch of new products. The company is set to launch the Brady MRI safe system and X4 Quad system in the CRM segment in 2016.

Further, Boston Scientific’s growth opportunity in the interventional cardiology segment will continue in 2016. This comes from the fact that the company’s Synergy bio-absorbable polymer drug-eluting stents got FDA approval only recently and have yet to see market adoption in the U.S. market. Moreover, given the significant advantages of this product over the previous versions, Boston Scientific has a significant opportunity to improve its market share in interventional cardiology. Coronary stent sales contribute significantly to Boston Scientific’s Interventional Cardiology segment, which constitutes close to 30% of the company’s value according to our estimates. (For more details read as to how Boston Scientific Can Expand Its Share In The U.S. Coronary Stent Market With Synergy BP-DES)

Additionally, Boston Scientific’s launch of the single use digital flexible ureteroscope in January will also add to its urology segment’s revenue growth in the coming quarters. We believe that the company’s constant focus on bringing innovative and technologically advanced products in the market will help it maintain a leadership position.

Transvaginal Mesh Lawsuits Could Be An Issue In 2016

Boston Scientific had to pay more than $100 million in 2015 to settle around 3,000 charges related to transvaginal mesh lawsuits. According to reports, there are still around 30,000 cases outstanding against the company related to the same issue. Even though transvaginal mesh accounts for less than 7% of Boston Scientific’s revenue, going forward the company might have to pay significant amounts as litigation charges to settle the large number of cases.

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