Boston Scientific BSX is gaining traction in the emerging markets. New regulatory approvals and accretive acquisitions bode well for its long-term growth. Yet, an unfavorable currency movement and macroeconomic concerns are major dampeners. The stock carries a Zacks Rank #3 (Hold) at present.
BSX successfully continues with its expansion of operations across different geographies outside the United States. In 2022, 40% of the company’s consolidated revenues came from international regions.
The company is also putting additional efforts to expand its foothold in the emerging markets (which are defined as all countries except the United States, Western and Central Europe, Japan, Australia, New Zealand and Canada), which hold strong growth potential based on their economic conditions, healthcare sectors and global capabilities. In the fourth quarter of 2023, despite the ongoing weaknesses in Russia, the emerging markets registered sturdy growth, primarily due to strong performance in China and Latin America. During this period, the emerging markets' net sales grew nearly 19% year over year on an operational basis.
In the post-pandemic period, Boston Scientific has been consistently registering fast recovery within its MedSurg segment. The Endoscopy business within MedSurg is gaining from strong worldwide demand for its broad range of gastrointestinal (GI) and pulmonary treatment options. The company is gaining market shares with its biliary franchise, led by the AXIOS Stent and Delivery System and the hemostasis, single-use imaging and metal stents franchises.
Boston Scientific Corporation Price
Boston Scientific Corporation Price
Boston Scientific Corporation price | Boston Scientific Corporation Quote
In the fourth quarter of 2023, BSX reported strong organic growth contributions from single-use imaging and AXIOS technologies. Endoscopy demonstrated notable strength in the United States, Latin America and Asia-Pacific, with new product momentum and healthy procedure demand over the past few quarters.
Within Urology, Boston Scientific continues to expand its market share globally. The company’s Stone Management franchise is growing well, led by LithoVue Single-Use Digital Flexible Ureteroscope System. Further, BSX is also registering strong growth within its Prosthetic urology franchise.
We are also impressed with the company’s recent acquisitions that have added numerous products (though many are under development) with immense potential. This, in turn, should help boost the top line in the long term.
In December 2023, Boston Scientific announced its plans to acquire Axonics, a medical technology company that offers innovative devices to treat urinary and bowel dysfunction. With this $3.7-billion acquisition, the company expects to expand its differentiated technologies portfolio within Urology.
In November 2023, BSX acquired Relievant Medsystems, the developer of FDA-approved Intracept Intraosseous Nerve Ablation System. This business is expected to expand the company’s Neuromodulation portfolio.
On the flip side, the industry-wide trend of challenging macroeconomic conditions in the form of inflation, disruptions in economic activity, global supply chains and labor markets, volatile financial market dynamics and significant volatility in price and availability of goods and services is putting pressure on Boston Scientific’s profitability. Further, international conflicts, including the Russia-Ukraine war and tension between China-Taiwan, have increased cybersecurity risks on a global basis. With the sustained macroeconomic pressure, the company may struggle to keep its operating expenses under check.
In the fourth quarter of 2023, the company reported a 13.4% rise in cost of product sold and a 18.6% rise in selling, general and administrative expenses. Adjusted operating margin contracted 22 bps to 22.1% in the quarter.
Meanwhile, with Boston Scientific recording 40% of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the past few quarters, as in the case of other important MedTech players too.
In 2023, the company had an approximate 80 basis-point headwind from foreign exchange on revenues.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita DVA, Cardinal Health CAH and Stryker SYK. While DaVita sports a Zacks Rank #1 (Strong Buy), Cardinal Health and Stryker carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for DaVita’s 2024 earnings per share (EPS) have moved up from $8.46 to $8.97 in the past 30 days. Shares of the company have surged 81.9% in the past year compared with the industry’s 26.9% growth.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.57%. In the last reported quarter, it delivered an earnings surprise of 22.22%.
Cardinal Health’s shares have surged 59.1% in the past year. Earnings estimates for Cardinal Health have risen from $7.17 per share to $7.28 for fiscal 2024 and from $7.94 per share to $8.03 for fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.67%.
Estimates for Stryker’s 2024 EPS have increased from $11.84 to $11.86 in the past 30 days. Shares of the company have risen 30.7% in the past year compared with the industry’s growth of 10.8%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an earnings surprise of 5.81%.
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