Boston Scientific’s Stock Down 10%, What Comes Next?

by Trefis Team
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Trefis
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Boston Scientific
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Here is an interesting fact. While most stocks have been climbing, Boston Scientific’s (NYSE:BSX) stock is doing something different. It fell -10.5% in the last 5 trading days and is down -9.5% in November overall. Does it mean it is time to get out? We don’t think so. In fact, we believe that Boston Scientific’s stock can rebound from current levels over the next few months. We conclude this based on the stock’s pattern analysis and its underlying fundamentals. Let’s see how.

Our AI engine analyzes past patterns in stock movements to predict near term behavior for a given level of movement in the recent period, and suggests nearly a 5.8% expected return for Boston Scientific over the next 3 months, and a significantly higher 12% over the next 6 months. Our detailed dashboard highlights the expected return for Boston Scientific given its recent move, and can help you understand near-term return probabilities for different levels of movements.

But what about the fundamentals? Our dashboard Big Movers: Boston Scientific Moved -10.5% – What Next? lays this out, indicating continued revenue and margin growth, accompanied by the market recognizing the stock’s value in the last few years. We recently suggested how New Product Launches And Attractive Valuation To Drive Boston Scientific Stock Higher, and that continues to be our stance.

Boston Scientific’s stock price decreased -15.9% this year, from $45.22 to $38.03, before moving -10.5% last week, and ending at $34.02. At the beginning of this year, Boston Scientific’s trailing 12 month P/S ratio was 5.86. This figure decreased -8.3% to 5.37, before ending at 4.81. Compared to Boston Scientific’s P/S multiple of 4.81, the figure for its peers Baxter, Medtronic and Abbott stands at 3.44, 5.37, and 6.05 respectively. This indicates, that Boston Scientific’s multiple, and consequently its market value, can expand. But do the underlying fundamentals also support this? Turns out, they do.

Boston Scientific’s stock price increased 82.4% between 2017 and 2019. This was driven by an 18.6% increase in revenue from $9,048 Mil in 2017 to $10,735 Mil in 2019, and net margins expanding from 1.1% in 2017 to 43.8% in 2019. Interestingly, the last 12 months haven’t been too bad either despite Covid-19. The revenue decline is limited to -5.8% over 2019 numbers, and margin is still very healthy at 36.5%. We don’t see many red flags which, coupled with the output of our AI engine, gives us confidence that Boston Scientific can be a good investment.

But what if you are looking for a diversified portfolio? Check out a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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