Boston Scientific’s Q4 Earnings And What Lies Ahead For The Company In 2019

by Trefis Team
Boston Scientific
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Boston Scientific (NYSE:BSX) recently reported its Q4 results, which were in line with our estimates. The top line grew in mid-single-digits while the adjusted earnings of $0.39 per share was up in low double-digits. This can be attributed to steady growth in all segments, primarily MedSurg, which continued to see high growth in Urology & Pelvic Health. Slight improvement in margins also aided the bottom line growth in Q4. Looking forward, we forecast the MedSurg segment to continue to drive the near term earnings growth for the company, along with Neuromodulation. We have created an interactive dashboard analysis ~ A Quick Snapshot of Boston Scientific’s Q4 Performance And Trefis Estimates For The Full Year 2019. You can adjust various drivers to see the impact on the company’s earnings, and price estimate. Below we discuss our forecasts.

Expect Revenues To Grow In High Single-Digits In 2019

We expect Boston Scientific’s total revenues to grow in high single-digits in 2019. This growth will primarily be led by its MedSurg segment, which comprises of medical devices designed and manufactured for Endoscopy, and Urology & Pelvic Health. The company is seeing robust growth in LithoVue Digital Flexible Ureteroscope, and NxThera’s Rezûm System, and this trend will likely continue in the near term. The company’s management expects 110 basis points contribution to the top line from its recent acquisitions, including NxThera, in 2019. The Endoscopy business will likely benefit from continued demand for Resolution 360 Clips, SpyGlass DS Direct Visualization System, as well as Acquire Endoscopic Ultrasound Fine Needle Biopsy Device. All these devices have seen steady sales growth in the recent past, and we expect this trend to continue in the near term. Resolution 360 Clip enables a physician to provide controlled clip placement, designed for procedural accuracy. Similarly, SpyGlass DS Direct Visualization System’s ease of setup, use, and higher image quality optimizes the procedural efficiency. These products are gaining popularity, and aiding the overall segment growth.

Rhythm & Neuro segment primarily includes Cardiac Rhythm Management (Pacemakers and Defibrillators) products that require the use of electricity to treat abnormal heart conditions, along with Neuromodulation, which comprises of spinal cord stimulator (SCS) systems used for the management of chronic pain, deep brain stimulation (DBS) systems used in the treatment of Parkinson’s disease, tremor, and intractable primary and secondary dystonia. We forecast high single-digit segment revenue growth in 2019, primarily aided by the company’s new product line, Spectra WaveWriter Spinal Cord Stimulator (SCS) Systems, which allows the combination of multiple treatment options in one single device. Looking at Cardiovascular, which comprises of interventional cardiology and peripheral inventions, we forecast mid-to-high-single-digit revenue growth in 2019, led by continued demand for the company’s drug eluting products. Eluvia in particular is seeing high interest in the U.S., after its recent launch. The IMPERIAL study demonstrated that Eluvia was ahead in terms of 1-year patency over the Zilver PTX stent of Cook Medical. This should bode well for the company, and Eluvia will likely drive the segment revenue growth in the near term.

Overall, we expect the company to post adjusted earnings of $1.56 per share in 2019, reflecting a mid-single-digit growth over 2018. Our price estimate of $37 for Boston Scientific is based on a 24x forward price-to-earnings multiple, and is slightly below the current market price of $39. 

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