Boston Scientific Beats Estimate

Boston Scientific Corporation (BSX: 7.58 -0.71 -8.56%) reported fourth quarter and full fiscal 2009 results. For the fourth quarter, earnings per share were 20 cents, beating the Zacks Consensus Estimate of 13 cents. However, earnings were flat year over year. For fiscal 2009, earnings per share were 78 cents, beating the Zacks Consensus Estimate of 50 cents. However, earnings were lower than the year-ago figure of 80 cents.
 
Earnings Estimate Revision Trend and Zacks Rank
 
The earnings estimate revision for Boston has demonstrated a downtrend in the past 30 days. During the period, four out of twenty-one analysts have downgraded their earnings estimates while only one has upgraded his estimate for the first quarter of fiscal 2010. For fiscal 2010, seven out of twenty-seven analysts have downgraded their earnings estimates while one has upgraded his estimate.
 
The short-term downtrend in earnings estimate revision is reflected in the Zacks short-term recommendation (1-3 months) of ‘Underperform’, a Zacks Rank #4 for the stock. However, Boston’s sound business model along with its leadership position guarantees a Zacks long-term recommendation (6+ months) of ‘Neutral’, a Zacks Rank #3 for the stock.
 
Boston has witnessed earnings surprises in two out of the preceding four quarters with the four-quarter average being 10.05%. In the third quarter of fiscal 2009, Boston lagged the Zacks Consensus Estimate by 14.29%. However, in the second quarter of fiscal 2009, the company beat the Zacks Consensus Estimate by 53.85%.
 
Quarterly results
 
Total revenues in the fourth quarter increased 4% year over year to $2.079 billion. Cardiac Rhythm Management (CRM) revenues increased 6% year over year to $645 million. Within this, implantable cardioverter defibrillator (ICD) sales increased 5.2% year over year to $449 million. Pacemaker system sales increased 9.7% year over year to $158 million.
 
Cardiovascular revenues declined 1% year over year to $871 million. Within this, total coronary stent system sales declined 4.8% year over year to $453 million. Endosurgery revenues increased 13% year over year to $392 million.
 
Fiscal year results
 
Total revenues in fiscal 2009 increased 2% year over year to $8.188 billion. CRM revenues increased 5% year over year to $2.562 billion, fueled by higher sales of ICD and pacemakers.
 
Cardiovascular revenues declined 1% year over year to $3.520 billion. Within this, total coronary stent system sales increased 1.5% year over year to $1.879 billion as a result of higher demand for the company’s drug-eluting stents.
 
Boston maintained its leadership position in the drug-eluting stent market with a 39% share. Drug-eluting stent revenues increased 4.5% year over year to $1.708 billion in fiscal 2009. Endosurgery sales increased 6% year over year to $1.462 billion.
 
Geographically, the U.S. contributed roughly 57% to total fiscal 2009 revenues and increased 4% year over year. International revenues were approximately flat year over year.
 
Boston ended fiscal 2009 with cash and cash equivalents of $864 million. The company had an outstanding long-term debt of $5.915 billion.
 
Guidance
 
Boston has provided sales and earnings per share guidance for the first quarter and full fiscal 2010. For the first quarter of fiscal 2010, Boston expects net sales in the range of $2.000 billion to $2.100 billion. Earnings per share should be between 13 cents and 17 cents.
 
For fiscal 2010, Boston expects net sales in the range of $8.100 billion to $8.500 billion. Earnings per share should be between 62 cents and 72 cents.
 
Boston Scientific manufactures medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ: 62.32 -0.41 -0.65%), Medtronic Inc. (MDT: 41.75 -0.40 -0.95%), Abbott Laboratories (ABT: 52.99 -0.27 -0.51%) and St. Jude Medical Inc. (STJ: 37.26 -0.23 -0.61%).