What Trends Will Drive Boston Scientific’s Q3?

Boston Scientific (NYSE: BSX) is scheduled to report its Q3 2024 results on Wednesday, October 23. We expect the company to report revenues and earnings slightly below the consensus estimates. The company should continue to benefit from market share gains for some of its products, including Watchman. Our interactive dashboard analysis of the Boston Scientific’s FY 2024Q3 Earnings Preview has additional details.

What Trends Will Drive Boston Scientific’s Q3?

A rise in global procedure volume will likely bode well for Boston Scientific. Its new product launches in Asia Pacific should bolster its top-line growth. The Watchman product line has driven the Cardiovascular growth lately for Boston Scientific, a trend expected to continue in the near-term. Earlier this year, Boston Scientific secured the regulatory approval in China for the Farapulse Pulsed Field Ablation (PFA) System. This should aid the overall sales growth in China. However, higher costs may weigh on the operating margin. We expect adjusted earnings per share to come in at $0.58, versus the consensus estimate of $0.59. The company has guided for EPS to be in the range of $0.57 and $0.59.

How Did It Fare In Q2?

Looking at the previous quarter, Boston Scientific’s revenue of $4.1 billion, was up 14.5% y-o-y, with growth seen in both the segments. While the Cardiovascular segment saw a 9% rise in sales, MedSurg sales were up 18%. The adjusted EPS came in at $0.62, 17% higher than the $0.53 figure reported in the prior-year quarter. The company raised its full-year outlook to 13.5% to 14.5% sales growth, from its prior-guidance of 11% to 13% growth. The company also raised its full-year adjusted EPS outlook to be in the range of $2.38 to $2.42, versus its earlier estimate of $2.29 to $2.34 range.

What Does This Mean For BSX Stock?

We estimate Boston Scientific’s Valuation to be $83 per share, slightly below its current market price of $88. At its current levels, BSX stock is trading at 37x its adjusted earnings expectation of $2.39 per share in 2024. The 37x figure is higher than the stock’s average P/E ratio of 28x over the last five years. We think BSX stock is fairly priced now. However, any positive surprise in Q3 and a further uptick in outlook will likely result in investor optimism, bolstering its stock price growth.

BSX has outperformed the broader markets this year, with 53% gains, vis-à-vis 23% gains for the broader S&P 500 index. Notably, BSX is one of a handful of stocks that have increased their value in each of the last three years, but that still wasn’t enough for it to consistently beat the market. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.