Boston Scientific (NYSE:BSX) is scheduled to report its Q3 2021 results on Wednesday, Oct 27. We expect the company to report revenues and earnings in-line with the consensus estimates, driven by a rebound in volume of procedures performed. That said, a rise in Covid-19 cases in Q3, due to the spread of the delta variant, along with supply-chain constraints likely impacted the overall earnings growth for the company. While we don’t expect any earnings surprise from Boston Scientific, its stock has some more room for growth, in our view. Trefis’ forecast indicates that Boston Scientific’s valuation is $50 per share, which is 11% higher than the current market price of under $45. Our interactive dashboard analysis on Boston Scientific’s Pre-Earnings has additional details.
(1) Revenues expected to be in-line with the consensus estimates
Trefis estimates Boston Scientific’s Q3 2021 revenues to be around $2.94 billion, in-line with the consensus estimate. With a rise in overall vaccination rates across the globe, the healthcare institutions now have more resources to address the surgeries that were postponed earlier, implying a rebound for Boston Scientific’s medical devices business. In fact, the company’s overall sales surged 54% in Q2 this year. While MedSurg and Rhythm & Neuro segment sales were up 65% each (y-o-y), Cardiovascular segment sales grew 51%. The company’s Left Atrial Appendage Closure (LAAC) device – Watchman – continues to gain market share driven by higher physician utilization rate. Our dashboard on Boston Scientific Revenues offers more details on the company’s segments. Boston Scientific’s management in the Q2 earnings call conference guided for a revenue growth of 11% to 13% in Q3, and we estimate the growth to be at the lower end of this range, given the disruption due to the spread of the delta variant.
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2) EPS also likely to be in-line with the consensus estimates
Boston Scientific’s Q3 2021 adjusted earnings per share (EPS) is expected to be $0.37 per Trefis analysis, in-line with the consensus estimate. Boston Scientific’s adjusted net income of $577 million in Q2 2021 reflected a large 5x growth from its $120 million figure in the prior-year quarter. This can be attributed to higher revenues and over 1,200 bps rise in net margins. Note that Q2 2020 margins were significantly lower due to the impact of then imposed lockdowns. But now with a robust demand outlook, margins are expected to improve. That said, supply-chain constraints and inflationary pressure may impact the margins in the near term. For the full-year, we expect the adjusted EPS to be higher at $1.62 compared to $0.97 in 2020.
(3) Stock price estimate 11% higher than the current market price
Going by our Boston Scientific’s Valuation, with an EPS estimate of around $1.62 and a P/E multiple of around 31x in 2021, this translates into a price of $50, which is 11% above the current market price of under $45. At current levels of around $45, BSX is trading at under 28x its expected EPS of $1.62 in 2021, and the 28x figure compares with levels of 29x seen in 2018 and 37x as recently as late 2020, implying there is more room for growth in BSX stock.
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
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