Boston Scientific Q1 Preview: Expect MedSurg To Drive Earnings Growth

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Boston Scientific

Boston Scientific (NYSE:BSX) is set to report its Q1 2018 earnings on April 25, and we expect the company to post high single digit revenue growth, primarily led by continued high growth in the MedSurg segment. We also expect the company’s Cardiovascular, and Rhythm Management to see single digit growth. The company has announced multiple acquisitions in 2018, including nVision Medical Corp and Securus Medical Group. We’ll be looking forward to hearing from the company’s management on recent acquisitions and expected growth going forward. We continue to believe that the MedSurg segment will remain a key growth driver for Boston Scientific in the near term, primarily led by Endoscopy, and Women’s Health. We have created an interactive dashboard on Boston Scientific’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s performance.

Expect MedSurg Segment To Outperform In 2018

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We expect Boston Scientific’s MedSurg revenue to grow by 11% in 2018, primarily led by a continued growth in Endoscopy, which saw a 12% growth in 2017, and we expect similar growth in the near term. The company has been introducing new products in this space, and the same has aided the revenue growth. For instance, it launched the spyglass, a visualization system to treat Pancreatico-biliary diseases, and Resolution 360, which helps prevent bleeding during endoscopic procedures. Both the products are performing well in the market. The company also expects to launch several other products over the next few years, which should help in increasing its market share. In addition, the growth will be aided by demographic trends across the globe. As Europe and the U.S. are witnessing an aging population, demand for endoscopy products is likely to increase. This trend, coupled with a growing population and improved healthcare in emerging markets, should boost long-term sales.

In the Cardiovascular segment, we expect revenues to grow in mid-single-digits, primarily led by Synergy, and Promus stents. In addition, the peripheral interventions sales are also seeing moderate growth. Boston Scientific has launched of a number of products, including Mustang percutaneous transluminal angioplasty (PTA) balloon, which is used for a wide range of peripheral angioplasty procedures, and Charger PTA Balloon Catheter, which is helping the company maintain a strong position in the peripheral interventions market. Looking at Boston Scientific’s Rhythm Management segment, we forecast revenues to grow in low-single-digits in 2018. Within Rhythm Management, we expect a double digit growth in Electrophysiology, primarily led by continued growth in Rhythmia Mapping System.

Overall, we expect the company to post earnings of $1.35 in 2018. We forecast a TTM price to earnings multiple of 25 by the end of 2018, which is slightly lower than most of the estimates for the sector, to arrive at our price estimate of $34 for Boston Sceintific. This implies a premium of around 17% to the current market price.

 

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