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Thursday, August 18, 2022

Boston Scientific: Needham Warns of Competition, Says “Hold”

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Boston Scientific (BSX) posted its second-quarter 2021 earnings on Tuesday, July 27. Notably, the medical equipment manufacturer exited the second quarter on a bullish note, surpassing consensus estimates for revenues and earnings per share (EPS).

Quick recovery from the pandemic prompted the company’s management to increase its revenue and EPS outlook for 2021. The company also impressively managed to report margin expansion despite an increase in costs and expenses. (See Boston Scientific stock chart on TipRanks)

Following the release, Needham analysts led by Michael Matson weighed the forces behind the results and updated their estimates for 2021 and 2022, while reiterating a Hold rating on the stock.

Matson justified his rating with the argument that Boston Scientific may face market share loss due to competitive product launches by rivals. He said, “We remain concerned that 2022E and 2023E consensus estimates are aggressive and believe that Boston Scientific faces several upcoming competitive headwinds leading us to maintain our Hold rating.”

Nonetheless, the analyst increased the 2021 revenue expectations to $12.03 billion from $11.62 billion, and 2022 revenue outlook to $12.86 billion from $12.44 billion. He expects Boston Scientific to witness 21.4% year-on-year revenue growth in 2021, and 6.9% year-over-year growth in 2022, driven by strong and diverse product portfolio and pipeline. Market share gains in key markets, including CRM, neuromodulation and structural heart, are expected to boost the top line.

Moreover, Matson and his associates upped their view of Boston Scientific’s 2021 and 2022 EPS. The analyst stated that favorable product mix, cost reduction efforts, and operating leverage should fuel earnings growth. Notably, the analyst pegged the research firm’s estimates for EPS at $1.62 for 2021, up from $1.59 guided previously, indicating a 68.6% year-over-year growth. Furthermore, he has raised his guidance on 2022 EPS to $1.80 from $1.79, indicating an 11% year-over-year growth.

Consensus among analysts for Boston Scientific’s prospects is a Strong Buy based on 15 Buys and 3 Holds. The average Boston Scientific price target of $51 implies 13% upside potential to current levels over the next 12 months.

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Boston Scientific: Needham Warns of Competition, Says “Hold” appeared first on TipRanks Financial Blog.

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