January 31, 2019

BSX – Market expectations are for record-high Uniform ROA, but management has concerns about growth, product launches, clinical trials, and momentum


  • Boston Scientific Corporation (BSX:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 23.0x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about revenue growth, product launches, clinical studies and outcomes, and core business momentum
  • Specifically, management may lack confidence in their ability to sustain revenue growth, and may be concerned about new product launches. Furthermore, they may be exaggerating the clinical outcomes of Eluvia, and overstating the progress of other clinical studies. Additionally, management may be concerned about continued declines in their coronary drug-eluding stent business, and demand for permanent polymer stent alternatives. Moreover, management may have concerns about FDA approval of IDEs for clinical studies, and may lack confidence in their ability to deliver double digit EPS growth. Also, they may be overstating core business momentum, and the capabilities of TAVR. Likewise, management may have concerns about their ability to manage headwinds for their SYNERGY product and may be concerned about litigation settlements and tax rates
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