Boston Scientific Corporation (BSX) is seen as a turnaround story with a single digit stock price and a forward P/E of 13. But this Zacks #1 Rank (strong buy) recently surprised on the Zacks Consensus Estimate for the 7th quarter in a row and raised full year guidance.
Boston Scientific is a global company that makes medical devices in a broad range of areas including Cardiology, Rhythm and Vascular Group, the Endoscopy Division, Urology and Women’s Health Division and the Neuromodulation Division.
Boston Scientific Beat By 11%
On July 28, Boston Scientific kept its winning streak alive as it reported second quarter results which beat the Zacks Consensus for the 7th time in a row. Earnings per share were 10 cents compared to the consensus of 9 cents.
Net sales rose 2% to $1.98 billion from $1.93 billion last year. However, if you exclude the impact of changes in foreign currency exchange rates and sales from divested businesses, net sales were flat year over year.
Several of the segments had solid quarters. Neuromodulation sales rose 16%, Peripheral Interventions jumped 7%, Endoscopy and Urology climbed 6% on a worldwide constant currency basis due to new product introductions.
The company is also ramping up its investment in China. It intends to spend an additional $150 million over the next 5 years to develop local manufacturing capabilities and to build a training center.
It expects headcount in China to grow to 1200 from the current 200 employees.
Raised Full Year Guidance
The company is bullish on the rest of 2011 as it raised its full year guidance to the range of 64 to 70 cents per share from its prior forecast of 58 cents to 68 cents per share.
After the guidance was raised, the analysts jumped in to raise their estimates as well with the 2011 Zacks Consensus Estimate jumping to 45 cents from 40 cents in the last 30 days.
While this is an earnings decline of 7% from 2010, analysts believe the company will turn around earnings in 2012 with growth of 17.5%.
BSX Is a Value Stock
Shares haven’t done much in the last 3 years.
But with a forward P/E of 13.6, which is under the 15x cut-off I use for value, Boston Scientific is well within the range for a value stock.
The company also has a price-to-book ratio of 0.8. A P/B ratio under 3.0 usually means there is value.
With Boston Scientific, investors are getting a turnaround story that is priced cheaply.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.
