What To Expect From Boston Scientific Stock Following Q2 Earnings?

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Boston Scientific

Boston Scientific (NYSE: BSX) is scheduled to report its Q2 2021 results on Wednesday, July 27. We expect the company to report revenues and earnings in line with the consensus estimates. A rise in the number of elective surgeries performed will likely aid the company’s top-line growth. However, lockdowns in China owing to a Covid wave in Q2 probably weighed on the overall top-line growth. Furthermore, higher inflation may weigh on the company’s operating margins.

Although we expect Boston Scientific to post in-line results in Q2, our forecast indicates that BSX stock is undervalued at its current levels, as discussed below. Our interactive dashboard analysis of the Boston Scientific Earnings Preview has additional details.

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(1) Revenues expected to align with the consensus estimates

  • Trefis estimates Boston Scientific’s Q2 2022 revenues to be around $3.2 billion, in-line with the consensus estimates.
  • The company should benefit from a continued uptick in elective procedures post-pandemic.
  • Its recent acquisitions, including Baylis, should aid the overall revenue growth.
  • Looking back at Q1, the company reported a 10% y-o-y rise in sales to $3.0 billion, led by a healthy 11% growth for its Cardiovascular segment, a 10% growth for Medical Devices, and a 9% rise in MedSurg sales.
  • Our dashboard on Boston Scientific Revenues offers more details on the company’s segments.

(2) EPS is likely to be in line with the consensus estimates

  • Boston Scientific’s Q2 2022 adjusted earnings per share (EPS) is expected to be $0.43 per Trefis analysis, aligning with the consensus estimate.
  • Boston Scientific’s adjusted net income of $562 million in Q1 2021 reflected a 7% growth from its $524 million figure in the prior-year quarter.
  • This can be attributed to higher revenue partially offset by lower net margins.
  • The ongoing inflationary headwinds and supply chain disruption likely weighed on the company’s net margin expansion in Q2.
  • For the full-year 2022, we expect the adjusted EPS to be higher at $1.80, compared to $1.63 in 2021.

(3) BSX stock appears to be undervalued

  • We estimate Boston Scientific’s Valuation to be $47 per share, which is 27% above the current market price of $37.
  • At its current levels, BSX stock is trading at under 21x forward P/E based on our earnings forecast of $1.80 for 2022, compared to the last three-year average of 31x, implying that BSX stock is attractive from a valuation point of view.
  • If the company reports upbeat Q2 results and provides an outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for BSX stock.
While BSX stock looks undervalued, it is helpful to see how Boston Scientific’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Xylem vs. Merck.

With inflation rising and the Fed raising interest rates, among other factors, BSX stock has fallen 14% this year. Can it drop more? See how low Boston Scientific stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BSX Return 0% -12% 72%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 3% -21% 214%

[1] Month-to-date and year-to-date as of 7/19/2022
[2] Cumulative total returns since the end of 2016

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