Boston Scientific’s Q4 Earnings Preview: Can BSX Beat Average Consensus Earnings?

by Trefis Team
Boston Scientific
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Boston Scientific (NYSE: BSX) is slated to release its Q4 and full-year 2019 results on February 5, 2020, and we don’t expect it to beat the average consensus EPS of $1.57. For full year 2019, Trefis estimates that the company will report:

  • Revenues of $10.74 billion, reflecting 9.3% y-o-y growth, partly driven by the company’s BTG acquisition. Our revenue forecast is slightly lower than the consensus estimate of $10.75 billion.
  • EPS figure will likely improve to $1.57 on an adjusted basis, primarily due to higher revenues. Our EPS figure forecast is in line with the consensus estimate of $1.57.

We believe that an in-line earnings for full year 2019 will likely result in a slight positive movement in Boston Scientific’s stock price, post earnings announcement.  In fact, our forecast indicates that Boston Scientific’s valuation is $44 a share, which is slightly above the current price of ~$42. Our interactive dashboard analysis on Boston Scientific’s Pre-Earnings has more details about our expectations, parts of which we highlight below.

(1) Revenues Expected To Be Slightly Below The Consensus Estimates

  • Trefis estimates Boston Scientific’s 2019 revenues to be $10.74 billion, slightly below the consensus estimate of $10.75 billion.

(1) Cardiovascular                    $4.02 Bil (37%)
(2) Rhythm Management       $3.24 Bil (30%)
(3) MedSurg & BTG                 $3.48 Bil (32%)
TOTAL                                       $10.74 Bil
Consensus                                 $10.75 Bil
Surprise                                     $(0.01) Bil

Note: Numbers may not add up due to rounding. 

  • Total revenues have increased at an average annual rate of 9.5% from $7.5 billion in 2015 to $9.8 billion in 2018. It is expected to see only 9.3% growth in 2019. This would mainly be driven by the company’s Medical Devices business and the impact of BTG acquisition.
  • See Boston Scientific Revenues – How Does BSX Make Money? We provide an interactive, in-depth view of the company’s revenues along with our forecasts.
  • Key for 2020: Boston Scientific’s revenue will likely grow in low double-digits on average over 2019-2020, led by steady growth across its segments, as well as the impact of BTG acquisition.

(2) EPS Likely To Be In Line With The Consensus Estimates

  • Boston Scientific’s 2019 adjusted earnings per share (EPS) is expected to be $1.57 per Trefis analysis, in line with the average consensus estimate.

Total Revenues         $10.7 Bil
– Total Expenses       $8.5 Bil
Net Income                $2.2 Bil
÷ No. of Shares         1.4      Bil
EPS                             $1.57
Consensus                 $1.57
Surprise                     $0.00

  • Adjusted EPS expected to increase 6.7% from $1.47 in 2018 to $1.57 in 2019, driven by an increase in revenues, partly offset by higher expenses.
  • As we forecast Boston Scientific’s revenues to grow at a slower rate than its expenses in 2019 (9.3% vs. 10.0%), this will result in a 50 bps decline in the company’s adjusted net income margin figure from 21.0% in 2018 to 20.5% in 2019, as detailed in Boston Scientific’s Pre-Earnings dashboard.
  • See Boston Scientific Expenses – How Does BSX Spend Its Money? We provide an interactive, in-depth view of the company’s expenses, and earnings margins.
  • Key for 2020: We believe that revenue will grow at a faster pace when compared to expenses over 2019-2020, resulting in the net income margin figure to increase to 22.1% in 2020, as compared to 21.0% in 2018. We currently forecast adjusted EPS to be $1.88 in 2020.

(3) Stock Price Estimate ~ 5% Higher Than Market Price

  • Trefis forecast for Boston Scientific’s 2019 earnings is in line with the market expectations, but P/E multiple is slightly higher than the consensus, working out to a fair value of $44 for Boston Scientific’s stock, which is roughly 5% higher than the current market price of around $42.
  • A trailing P/E multiple of 28.0x looks appropriate for Boston Scientific’s stock, which is slightly higher than the current implied P/E multiple of 26.7x.
  • We use our full cash flow model for Boston Scientific to arrive at a P/E multiple of 28.0x for a price estimate of $44.
  • Boston Scientific’s P/E multiple has been higher than its peers, as shown in the charts below.
  • Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year.

See all Trefis Price Estimates and Download Trefis Data here

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