Key Takeaways From Boston Scientific’s Q3

Boston Scientific’s stock saw a decline despite the company beating analyst estimates in Q3 2017. To understand the key takeaways from Boston Scientific’s earnings, please our interactive breakdown of the results and our model for the company. Our price estimate for Boston Scientific stands at $29.50, which is slightly ahead of the current market price.

Earnings Snapshot: Boston Scientific Topped Estimates, But Stock Fell 

Boston Scientific did reasonably well in the third quarter, with revenue growing by 5.5% and its operating margin expanding by 50 bps. In addition, the company’s EPS saw a massive jump of 23.5%.  However, the stock still fell nearly 6% as investors expressed concerns about the Cardiac Rhythm Management business, which saw a slight revenue decline

First takeaway: MedSurg Segment Will Remain Key Growth Engine

MedSurg, or medical surgery, includes the endoscopy, urologic and pelvic health, and neuromodulation businesses. MedSurg revenue grew by 10.4%, which was higher than growth in the company’s other segments. MedSurg’s biggest subsegment, endoscopy, grew nearly 10%, driven by the success of the Spy DS visualization system, Axios stent, Res 360 hemostasis clip, and ambulatory surgery center portfolio. Going forward, we expect that MedSurg will remain a key growth engine for the company, as the competition in other segments is likely to intensify.

Second Takeaway: Competition From Abbott May Pose Risks

Boston Scientific’s Cardiac Rhythm Management segment’s revenue declined slightly (~ $4 million) in the third quarter, which reflects growing competition from Abbott. Through the acquisition of St. Jude Medical, Abbott has significantly strengthened its cardiovascular business. This will likely pose a major competitive threat to Boston Scientific going forward.

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