Boston Scientific Insider Sold Shares Worth $446,902, According to a Recent SEC Filing

It has been about a month since the last earnings report for Boston Scientific (BSX). Shares have added about 7.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Boston Scientific due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Boston Scientific Q3 Earnings Beat Estimates, View Up

Boston Scientific posted adjusted earnings per share of 63 cents for the third quarter of 2024, up 26% from the year-ago figure. The figure beat the Zacks Consensus Estimate by 8.6% and also exceeded the company’s adjusted earnings per share guidance range of 57-59 cents per share.

The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring and restructuring-related charges, among others.

Reported earnings per share for the third quarter was 32 cents, reflecting a 5.9% decline from the year-ago quarter figure.

Third-quarter revenues of $4.21 billion improved 19.4% year over year on a reported basis and 19.5% on an operational basis (at a constant exchange rate or CER). Revenues grew 18.2% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments).

The top line exceeded the Zacks Consensus Estimate by 4.5%. The quarter’s top-line performance also exceeded the company’s projection of 13-15% growth on a reported basis (same organically).

Q3 Revenues in Detail

In the third quarter, revenues rose 23.5% in the United States on a reported basis (same operationally).

Reported revenues rose 15.2% in the Europe, Middle East and Africa (EMEA) region (up 14.3% operationally) and 12.1% in the Asia Pacific zone (up 12.3% operationally).

Reported revenues increased 9% in Latin America and Canada (up 15.1%).

Reported revenue growth in emerging markets was 15.2% (up 16.8% operationally).

Segmental Analysis

Boston Scientific recently reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg and Cardiovascular.

The company generates maximum revenues from Cardiovascular. Cardiology and Peripheral Interventions sales, its sub-segments, were $2.13 billion (up 29.3% year over year organically) and $602 million (up 10.3%), respectively, in the third quarter.

Within MedSurg, Endoscopy generated revenues of $678 million, up 7.4% organically.

Urology revenues were $532 million, reflecting organic growth of 10.4%.

Neuromodulation within MedSurg reported $268 million in revenues, reflecting a 2.7% rise organically year over year.

Margins

Gross margin in the third quarter improved 5 basis points (bps) year over year to 68.8%. There was a 19.2% rise in the cost of products sold to $1.31 billion in the reported quarter.

Selling, general and administrative expenses rose 25.8% to $1.56 billion. Research and development expenses rose 14.3% to $407 million. Royalty expenses of $5 million, however, declined 55% year over year. Adjusted operating margin contracted 123 bps to 21.9% in the reported quarter.

2024 Guidance

Boston Scientific updated its full-year guidance and provided its fourth-quarter 2024 projections.

Full-year net sales growth is expected to be approximately 16.5% on a reported basis (up from the earlier expectation of 13.5-14.5% growth) and approximately 15% on an organic basis (13-14% growth projected earlier). The Zacks Consensus Estimate is currently pegged at $16.26 billion, indicating a 14.2% rise from the 2023 reported figure. Full-year adjusted earnings per share is expected in the range of $2.45 to $2.47 ($2.40 to $2.42 estimated earlier). The Zacks Consensus Estimate is currently pegged at $2.40.

For the fourth quarter of 2024, revenue growth is projected in the range of approximately 16.5-18.5% on a reported basis (up 14-16% organically). Adjusted earnings are expected in the range of 64-66 cents per share. The Zacks Consensus Estimate for fourth-quarter earnings and revenues is pegged at 64 cents per share and $4.25 billion, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Boston Scientific has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Boston Scientific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Boston Scientific is part of the Zacks Medical - Products industry. Over the past month, Abbott (ABT), a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended September 2024 more than a month ago.

Abbott reported revenues of $10.64 billion in the last reported quarter, representing a year-over-year change of +4.9%. EPS of $1.21 for the same period compares with $1.14 a year ago.

Abbott is expected to post earnings of $1.34 per share for the current quarter, representing a year-over-year change of +12.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Abbott. Also, the stock has a VGM Score of D.

Zacks Investment Research

IDEXX Laboratories, Inc.’s IDXX consistent strong performance of the CAG (Companion Animal Group) segment is poised to help it grow in the upcoming quarters. Robust demand for its cloud-based offerings instills optimism, reflecting the company’s focus on improving patient care rather than back-office tasks. Solid performance in the international markets is encouraging. However, unfavorable solvency and the impact of third-party distributors remain our concerns for IDEXX’s operations.

In the past year, this Zacks Rank #3 (Hold) stock has decreased 12.5% against the 14.5% rise of the industry and the 30% growth of the S&P 500 composite.

The renowned medical device company has a market capitalization of $9.18 billion. IDEXX has an earnings yield of 2.49%, which compares favorably with the industry’s -6.05% yield. IDEXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 0.85%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Let’s delve deeper.

Upsides for IDXX

Strength in CAG: The company’s long-term success in CAG recurring diagnostic products and services depends upon the growing volumes of existing customers by increasing their utilization of existing and new test offerings, acquiring new customers, maintaining high customer loyalty and retention, and realizing modest annual price increases. In the third quarter of 2024, CAG Diagnostics’ recurring revenues increased 7% organically, supported by an average global net price improvement of approximately 5%, with the U.S. net price realization of approximately 4%. Also, recurring revenue growth was driven by 10% international organic gains.

The company generated substantial revenues and margins from selling consumables used in IDEXX VetLab instruments. Veterinary software and diagnostic imaging revenues increased 11% on a reported basis, including the benefits of a recent Greenline software and data platform acquisition.

Cloud-Based Software in Trend: IDEXX is driven by the huge demand for medical services to develop its software solutions. Its cloud-based products, including ezyVet, Animana, Cornerstone, IDEXX NEO, DVMAX PIMS (practice information management systems) and Web PACS (picture archiving and communication system imaging software), continue to be in high demand in response to this trend. These software solutions are boosting innovation-driven growth by improving clinic workflows and supporting greater utilization of diagnostics.

In the third quarter, the company experienced strong growth in cloud-based product placements, comprising more than 95% of total software placements. The growing acceptance of the new Vello software solution is encouraging. IDEXX is also building on the robust features of its customer engagement solution by integrating Greenline Pet, a digital platform acquired in the first quarter.

Strong Global Performance: In late 2023, the company expanded its operations in the United States for the first time in four years, complementing the seven international expansions it has advanced since 2021. Through these strategic investments, the company is bolstering its future growth prospects by delivering high-touch commercial engagement in the fastest-growing regions while maintaining strong business performance. This expanded global commercial capability is yielding strong results overseas, with notable 10% organic growth in international CAG diagnostic recurring revenues in the third quarter of 2024.

The company is particularly witnessing strong global gains in consumable revenues banking on strong gains across its Catalyst, Premium Hematology and SediVue platforms. The company's Water segment revenues increased 13% organically in the third quarter, aided by strong performance in Europe.

Concerns for IDXX

Solvency Position: IDEXX closed the third quarter with cash and cash equivalents of $308.6 million and an even higher short-term debt of $349 million. Long-term debt (net of the current portion) dropped 10.2% sequentially to $623.9 million but remained higher than the cash levels. At the quarter end, times interest earned of 34.2X was better than the second quarter’s 32.3X.

Impact of Third-Party Distribution: Instrument consumables and rapid assay products in the company’s CAG segment are sold domestically and in certain other geographies by third-party distributors. As a result, distributor purchasing dynamics have an impact on the company’s reported sales of these products. Distributor purchasing dynamics can be affected by many factors that may not be directly related to the underlying end-user demand for the products. Reported results may reflect fluctuations in inventory levels held by distributors and may not necessarily mirror changes in the underlying end-user demand.

IDXX Stock Estimate Trend

The Zacks Consensus Estimate for IDEXX’s 2024 earnings per share (EPS) has moved down 1 cent to $10.43 in the past 30 days.

The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $3.88 billion. This suggests a 5.9% rise from the year-ago reported number.

Key MedTech Picks

Some better-ranked stocks in the broader medical space are Haemonetics HAE, Boston Scientific BSX and Penumbra PEN.

Haemonetics has an earnings yield of 5.41% compared to the industry’s 1.75% yield. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 2.82%. Its shares have risen 1.8% compared with the industry’s 23.1% growth in the past year.

HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.8%. Shares of the company have surged 60.2% compared with the industry’s 23.1% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.29%.

Penumbra, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 35.3% for 2024 compared with the industry’s 12.8%. Shares of Penumbra have risen 3.8% compared with the industry’s 14.5% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.

Zacks Investment Research

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Boston Scientific (BSX) ten years ago? It may not have been easy to hold on to BSX for all that time, but if you did, how much would your investment be worth today?

Boston Scientific's Business In-Depth

With that in mind, let's take a look at Boston Scientific's main business drivers.

Headquartered in Natick, MA and founded in 1979, Boston Scientific Corporation manufactures medical devices and products used in various interventional medical specialties worldwide. The company has adopted the organic as well as inorganic routes for success.

Boston Scientific reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg (38.1% of total revenue; 2023 organic growth was 10% over 2022) and Cardiovascular (accounting for the rest; 12.9% organic growth in 2023).

Within the Cardiovascular segment, the newly formed Cardiology division represents the combined former Rhythm Management and Interventional Cardiology businesses.

MedSurg group comprises 3 sub segments, viz. Endoscopy; Urology and Pelvic Health; and Neuromodulation.

The company is one of the leading players in the interventional cardiology market with its coronary stent product offerings. Boston Scientific markets a broad portfolio of internally-developed and self-manufactured drug eluting stents including the Promus PREMIER, Promus Element and Promus Element Plus everolimus-eluting stents. In addition, in Europe, it markets the SYNERGY Everolimus-Eluting Platinum Chromium Coronary Stent System featuring an ultra-thin abluminal (outer) bioabsorbable polymer coating.

The company also markets balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, and diagnostic catheters used in percutaneous transluminal coronary angioplasty (PTCA) procedures, as well as intravascular ultrasound (IVUS) imaging systems.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Boston Scientific ten years ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in November 2014 would be worth $7,071.10, or a 607.11% gain, as of November 22, 2024, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

The S&P 500 rose 188.28% and the price of gold increased 113.76% over the same time frame in comparison.

Analysts are forecasting more upside for BSX too.

Despite macroeconomic concerns, currency headwinds and related cost inflation, Boston Scientific is seeing strength across target markets. Strong worldwide demand for its MedSurg and Structural Heart lines, traction in United States and outside for its the next generation WATCHMAN FLX and FLX Pro, as well as contribution from accretive acquisitions are important drivers. The Pain and Brain franchisees are expected to gain solid traction in 2024 banking on strong execution of core growth strategies. The Electrophysiology arm continues to gain momentum on sustained adoption of FARAPULSE PFA. The 2024 guidance indicating strong growth over 2023 builds confidence in the stock. On the flip side, mounting costs due to worldwide geopolitical issues are major concerns. FX headwinds continue to largely offset the company’s performance. Shares have gained 7.52% over the past four weeks and there have been 12 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.

Zacks Investment Research