Boson Scientific (BSX) Earnings Preview: Shares Fibrillated Through Q1, Look to Restore Rhythm (STJ, MDT, JNJ)
Tweet
Share
E-mail
Get Alerts BSX Hot Sheet
Up)Join SI Premium – FREE
Boson Scientific (NYSE: BSX) shares are trading lower ahead of the company's first quarter earnings report, expected after the market closes today. The stock is down 1.32% to $7.11 after reaching an intraday high of $7.29.
BSX is expected to report EPS of $0.08 on revs of $2 billion. For Q409, BSX posted an adjusted EPS of $0.20, topping views, and revs were in-line with the Street. For Q109, BSX reported an EPS of $0.19, beating views. Revs missed for Q109. As a matter of fact, Boston Scientific has beaten bottom-line views since at least Q408, and generally beats by more than just one or two cents.
BSX had expected that they will post Q110 sales of $2.0 - $2.1 billion and an EPS of $0.13 - $0.17, but warned in the quarter that that temporary halt of ICD shipments may have a "material impact on the previously issued guidance" Analysts have adjusted estimates lower throughout the quarter as a result of the ICD issue.
Boston Scientific has fluctuated through Q110. Shares opened up at $8.86 on January 4, 2010, and fell 18% over the quarter to close at $7.22 on March 31, 2010. Shares gained 16.3% through 2009, and 48% from lows of $6.08 on March 9, 2010.
Data from Bloomberg shows that 8 analysts have a buy rating on the stock, 19 have a Hold, and 2 recommend to Sell the shares. The analyst consensus price is $7.91, with a high of $10, and a low of $6.
Boston Scientific is trading at 19.4x FY10 EPS estimates. For comparison, Medtronic, Inc. (NYSE: MDT) is going for 13.7x, and St. Joe (NYSE: STJ) is at 14.33x FY10 estimates. Using trailing 12-month earnings of $0.65, at a consensus 9.2% growth rate for the next five-years, and 2% growth thereafter, against the A&P benchmark return of 10%, we get BSX trading at $11.17. Discounting future cash flows against the risk-free rate of 3.81% and a Beta for the stock of 1.08, and you get a valuation of $10.50 per share.
News Through the Quarter
Boston Scientific started the quarter off rather quiet, enrolling patients in several trials. They won a patent infringement case against Johnson & Johnson (NYSE: JNJ), where JNJ claimed that BSX infringed on four of JNJ's Wright/Falotico patents.
In early February, however, BSX lost a patent case to JNJ as was ordered to pay $1.725 billion.
Early February also saw BSX cut 1,000 - 1,300 jobs from the company.
Mid-March is when the company suspended sales of their ICD devices. Shares plummeted huge on the 15th, falling as much as 18.9% on the day. In April, the company said it would immediately resume distribution of COGNIS CRT-Ds and TELIGEN ICDs in the U.S.
The FDA then said that they would expand their indication on the company's CRT-Ds, which would include the COGNIS CRT-D. The approval would allow Boston Scientific to be the only company with an FDA-approved CRT-D for high-risk New York Heart Association (NYHA) Class I and II(1) patients with Left Bundle Branch Block (LBBB) morphology and sinus rhythm.
Analyst Rating Changes Through the Quarter
Boston Scientific was hit with an onslaught of downgrades in early February, after the company's Q4 earnings.
Piper Jaffray downgraded to Neutral from Overweight, and lowering their price target to $10 from $11.
Deutsche Bank downgraded BSX to Hold from Buy, with a price target cut to $8.50 from $11.00 prior. They see an anemic growth profile for at least the next several quarters.
Noble Financial downgraded to Hold from Buy.
The company also saw a number price target reductions.
And, after their ICD situation, the company got another round of downgrades. J.P. Morgan, Summer Street, RBC Capital, UBS, and Craig-Hallum all downgraded the stock. Most notably was Goldman Sachs' downgrade, as they added the company to their conviction Sell list, noting that pricing will be key to gaining market share when the ICD ban is lifted.
Summary
It's okay to relax now, the company said, on April 15th, that they would be resuming distribution of their cardiac resynchronization therapy defibrillators (CRT-Ds) and implantable cardioverter defibrillators (ICDs), and that it will immediately resume distribution of its COGNIS CRT-Ds and TELIGEN ICDs following U.S. FDA approval of two manufacturing changes.
Shares of Boston Scientific are basically flat since announcing they would resume shipping the ICDs.
Investors will eagerly await a run-down of the financial impact of the halts. If they are minor and pricing and market share was not impacted greatly than investors may feel more secure with buying the stock.
Boston Scientific Corp. is expected to release their Q110 earnings on Monday, April 26, 2010 after 5PM ET. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
BSX is expected to report EPS of $0.08 on revs of $2 billion. For Q409, BSX posted an adjusted EPS of $0.20, topping views, and revs were in-line with the Street. For Q109, BSX reported an EPS of $0.19, beating views. Revs missed for Q109. As a matter of fact, Boston Scientific has beaten bottom-line views since at least Q408, and generally beats by more than just one or two cents.
BSX had expected that they will post Q110 sales of $2.0 - $2.1 billion and an EPS of $0.13 - $0.17, but warned in the quarter that that temporary halt of ICD shipments may have a "material impact on the previously issued guidance" Analysts have adjusted estimates lower throughout the quarter as a result of the ICD issue.
Boston Scientific has fluctuated through Q110. Shares opened up at $8.86 on January 4, 2010, and fell 18% over the quarter to close at $7.22 on March 31, 2010. Shares gained 16.3% through 2009, and 48% from lows of $6.08 on March 9, 2010.
Data from Bloomberg shows that 8 analysts have a buy rating on the stock, 19 have a Hold, and 2 recommend to Sell the shares. The analyst consensus price is $7.91, with a high of $10, and a low of $6.
Boston Scientific is trading at 19.4x FY10 EPS estimates. For comparison, Medtronic, Inc. (NYSE: MDT) is going for 13.7x, and St. Joe (NYSE: STJ) is at 14.33x FY10 estimates. Using trailing 12-month earnings of $0.65, at a consensus 9.2% growth rate for the next five-years, and 2% growth thereafter, against the A&P benchmark return of 10%, we get BSX trading at $11.17. Discounting future cash flows against the risk-free rate of 3.81% and a Beta for the stock of 1.08, and you get a valuation of $10.50 per share.
News Through the Quarter
Boston Scientific started the quarter off rather quiet, enrolling patients in several trials. They won a patent infringement case against Johnson & Johnson (NYSE: JNJ), where JNJ claimed that BSX infringed on four of JNJ's Wright/Falotico patents.
In early February, however, BSX lost a patent case to JNJ as was ordered to pay $1.725 billion.
Early February also saw BSX cut 1,000 - 1,300 jobs from the company.
Mid-March is when the company suspended sales of their ICD devices. Shares plummeted huge on the 15th, falling as much as 18.9% on the day. In April, the company said it would immediately resume distribution of COGNIS CRT-Ds and TELIGEN ICDs in the U.S.
The FDA then said that they would expand their indication on the company's CRT-Ds, which would include the COGNIS CRT-D. The approval would allow Boston Scientific to be the only company with an FDA-approved CRT-D for high-risk New York Heart Association (NYHA) Class I and II(1) patients with Left Bundle Branch Block (LBBB) morphology and sinus rhythm.
Analyst Rating Changes Through the Quarter
Boston Scientific was hit with an onslaught of downgrades in early February, after the company's Q4 earnings.
Piper Jaffray downgraded to Neutral from Overweight, and lowering their price target to $10 from $11.
Deutsche Bank downgraded BSX to Hold from Buy, with a price target cut to $8.50 from $11.00 prior. They see an anemic growth profile for at least the next several quarters.
Noble Financial downgraded to Hold from Buy.
The company also saw a number price target reductions.
And, after their ICD situation, the company got another round of downgrades. J.P. Morgan, Summer Street, RBC Capital, UBS, and Craig-Hallum all downgraded the stock. Most notably was Goldman Sachs' downgrade, as they added the company to their conviction Sell list, noting that pricing will be key to gaining market share when the ICD ban is lifted.
Summary
It's okay to relax now, the company said, on April 15th, that they would be resuming distribution of their cardiac resynchronization therapy defibrillators (CRT-Ds) and implantable cardioverter defibrillators (ICDs), and that it will immediately resume distribution of its COGNIS CRT-Ds and TELIGEN ICDs following U.S. FDA approval of two manufacturing changes.
Shares of Boston Scientific are basically flat since announcing they would resume shipping the ICDs.
Investors will eagerly await a run-down of the financial impact of the halts. If they are minor and pricing and market share was not impacted greatly than investors may feel more secure with buying the stock.
Boston Scientific Corp. is expected to release their Q110 earnings on Monday, April 26, 2010 after 5PM ET. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
You May Also Be Interested In
- IBM (IBM) to Acquire HashiCorp (HCP) for $35/sh Cash or $6.4B
- Genco Shipping & Trading Limited (GNK) Sends Letter to Shareholders
- YY Group Holding (YYGH) Closes $5M IPO
Create E-mail Alert Related Categories
Insiders' Blog, Trader TalkRelated Entities
Goldman Sachs Conviction Sell List, Piper Jaffray, Deutsche Bank, UBS, JPMorgan, RBC Capital, Noble FinancialSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
