Boston Scientific (NYSE: BSX) has been focusing on its endoscopy business in order to drive growth. Recently, it announced acquisition of LumenR Tissue Retractor System from LumenR LLC for an undisclosed amount. In the last quarter the company has announced acquisition of Endochoice in a deal valued at $210 million. In addition, it acquired Xlumena last year. The company has been carrying out tuck-in acquisitions to bolster its existing portfolio in the endoscopy business. Given these factors, we expect the division to be leading contributor to the company’s future growth.
Our price estimate for Boston Scientific of $25.5 is about 18% above the market price
What Is The Value Of Endoscopy Segment?
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Endoscopy is strong growing field with an expected annual growth rate of about 7% over the next 5 years. Boston Scientific is the leading player with the broadest range of portfolio. The company has global footprint and is experiencing strong growth from both the U.S. and global markets. Moreover, the division faces relatively lesser competition as compared to other business segments such as interventional cardiology. We expect it to grow at a CAGR of 5.3% over our explicit forecast period. We estimate the endoscopy business will contribute a little over 16% to company’s market cap. This values the division at the about $5 billion. The company has been very active with a continuous flow of small acquisitions. We like these deals where the company acquires relatively small company with a strong product and technology. These acquisitions do not put pressure on the company’s books, broaden the product portfolio and are easier to integrate. Boston Scientific can use its strong sales network to drive value sooner. Going forward we expect the company to continue with adding more products through smaller acquisitions. Presently, we forecast Boston Scientific to only slightly expand its market share. However, any significant increase would result in upside to our price estimate $25.48 per share. You can use our widget embedded below to build your own price estimate and see what value endoscopy division contributes to the company: