Boston Scientific stock (NYSE: BSX) has seen a fall of 3% in a month, compared with -5% returns for the broader S&P500 index. The company reported mixed Q4 results last month, with revenue falling in line but earnings missing the consensus estimate. Still, BSX stock trended higher due to better-than-expected guidance for 2023. However, we believe BSX stock is fully valued.
Boston Scientific’s revenue of $11.2 billion in Q4 2022 reflected a 3.7% y-o-y rise, driven by growth in both of its segments – Cardiovascular and MedSurg. The company continues to benefit from market share gains for its Left Atrial Appendage Closure device – Watchman – which saw its sales rise 22% y-o-y to $1.0 billion in 2022, compared to just $829 million in 2021 and $324 million in 2020. Boston Scientific also sees strong sales growth in Electrophysiology, up 18% y-o-y organically in 2022, and this trend is expected to continue in the near term.
The company has guided for its sales to rise between 5% and 7% and its adjusted EPS to be between $1.86 and $1.93 in 2023. It expects a 50 basis points improvement in operating margin in 2023. Our model considers the company’s guidance of mid-single-digit top-line growth and low double-digit bottom-line growth, partly driven by lower operating expenses.
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But, looking at valuation, at its current level of $47, BSX stock is already trading at 24x its forward expected earnings of $1.92 (which is at the higher end of the guided range), aligning with its last three-year average, implying that BSX stock is fully valued. We estimate Boston Scientific’s Valuation to be around $49 per share, marginally above the current market price. This represents a 25x forward P/E multiple, slightly above its historical average mentioned above, owing to the expected rise in operating margin in the coming years.
BSX stock has risen 6% in the last twelve months despite higher inflation and rising interest rates. But can it drop from here? 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.
|S&P 500 Return||-1%||2%||75%|
|Trefis Multi-Strategy Portfolio||0%||7%||237%|
 Month-to-date and year-to-date as of 3/2/2023
 Cumulative total returns since the end of 2016