Barclays Maintains an 'Underweight' on Boston Scientific (BSX); FDA Approval of Promus Element Sooner than Expected; Adjusting Estimates
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Price: $51.31 -0.23%
Rating Summary:
33 Buy, 9 Hold, 0 Sell
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Today's Overall Ratings:
Up: 7 | Down: 13 | New: 26
Rating Summary:
33 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 13 | New: 26
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Barclays maintains an 'Underweight' on Boston Scientific (NYSE: BSX) price target of $6.00.
Barclays analyst says, "Given the sooner than expected approval we are adjusting our estimates for BSX. With a mid-4Q11 entry, we expect BSX to begin marketing the product immediately. BSX anticipates it will take a $40 MM charge ($35 MM
after-tax) during the 4Q11 as a result of the early approval, primarily related to
inventory reserves which will impact gross margins and is not in guidance. This is
fundamentally similar to charges that BSX took in 2008 with the launches of Taxus Liberte' and Promus as the company anticipated customer returns of product and
inventory write-offs prior to its launch. Given our estimate of $45 MM higher margin Promus Element to be sold in the US in the quarter, we estimate a net negative
impact of 120 bps on 4Q11 margins or ~$22 MM due to the charge and Promus
Element sales. In 2011, we estimate that the earlier timing will add roughly $18 MM in gross profit and $0.01 in EPS, offset by ~$0.02 in dilution due to the charge. In 2012, we estimate that the earlier timing will increase Promus Element sales by roughly $278 million and gross profit by $111 million, leading to an incremental ~$0.04-$0.05 in EPS."
For an analyst ratings summary and ratings history on Boston Scientific click here. For more ratings news on Boston Scientific click here.
Shares of Boston Scientific closed at $5.31 yesterday.
Barclays analyst says, "Given the sooner than expected approval we are adjusting our estimates for BSX. With a mid-4Q11 entry, we expect BSX to begin marketing the product immediately. BSX anticipates it will take a $40 MM charge ($35 MM
after-tax) during the 4Q11 as a result of the early approval, primarily related to
inventory reserves which will impact gross margins and is not in guidance. This is
fundamentally similar to charges that BSX took in 2008 with the launches of Taxus Liberte' and Promus as the company anticipated customer returns of product and
inventory write-offs prior to its launch. Given our estimate of $45 MM higher margin Promus Element to be sold in the US in the quarter, we estimate a net negative
impact of 120 bps on 4Q11 margins or ~$22 MM due to the charge and Promus
Element sales. In 2011, we estimate that the earlier timing will add roughly $18 MM in gross profit and $0.01 in EPS, offset by ~$0.02 in dilution due to the charge. In 2012, we estimate that the earlier timing will increase Promus Element sales by roughly $278 million and gross profit by $111 million, leading to an incremental ~$0.04-$0.05 in EPS."
For an analyst ratings summary and ratings history on Boston Scientific click here. For more ratings news on Boston Scientific click here.
Shares of Boston Scientific closed at $5.31 yesterday.
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