Boston Scientific shares fall 10% on Watchman weakness, competitive pressures
Investing.com -- Boston Scientific Corp (NYSE: BSX) dropped 10% Wednesday after Chief Executive Mike Mahoney indicated that standalone Watchman heart implant procedures continue to decline and highlighted near-term challenges at the Bernstein conference.
The company maintained its full-year organic growth guidance of 6.5% to 8% and second quarter guidance of 5% to 7%, though analysts now expect results near the lower end of those ranges following management’s comments.
Boston Scientific now expects US Watchman revenue to be approximately flat sequentially in dollars in the second quarter compared to the first quarter, and approximately flat sequentially in the third quarter compared to the second quarter.
"What we’ve seen post the earnings call is a decline in standalone Watchman growth and increasing concomitant growth, so we’ve taken our number down in Watchman internally to match that guide," Mahoney said at the conference.
Boston Scientific holds a 91% market share in Watchman but has experienced a decline in standalone procedures, partly attributed to competitive pressures and workflow issues.
In electrophysiology, where the company is the second-largest player globally, Mahoney acknowledged market share losses as competitors launch products. "This year as the PFA leader we have lost some market-share as competitors are launching," he said, while maintaining confidence in the company’s pipeline and momentum.
The cardiac rhythm management business has also faced challenges. "CRM has been a tough one for us," Mahoney said. "Our gap continues to be in leadless which is the higher-growth area, and so we do have our pair leadless program with SICD which should launch in 2027, so that should improve it."
The company’s urology business faced headwinds from niche and price competitors in its core stone portfolio, along with commercial disruption related to Axonics. Management has hired approximately 100 clinical and sales representatives to improve performance in the Axonics urology business.
JPMorgan analyst Robbie Marcus, who maintains an overweight rating, said management’s disappointing Watchman update "raises concerns over trend visibility and further pressures sentiment." He noted the update came just weeks after the first quarter earnings call and shortly after a CEO call.
Stifel analyst Rick Wise, maintaining a buy rating, lowered his price target to $75 from $85, stating "near-term uncertainties persist" amid incrementally negative Watchman comments from management.
Bloomberg Intelligence analyst Matt Henriksson expects slower Watchman sales could pressure total revenue by 0.8 to 1.3 percentage points.
Boston Scientific continues to invest over 9% in internal organic research and development and maintains the largest venture fund in medical technology. Management plans to provide an update on its three-year long-range plan, including fiscal 2027 and 2028 projections, after the third quarter earnings call.