BSX - Embedded Expectations Analysis - 2019 01 31
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 momentumSpecifically, 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
Boston Scientific develops, manufactures and markets medical devices. The company's Medical Surgical segment consist of: Endoscopy, which develops and manufactures devices to diagnose and treat a range of gastrointestinal and pulmonary conditions; and Urology and Pelvic Health, which develops and manufactures devices to treat various urological and pelvic conditions. The company's Rhythm and Neuro segment includes: Cardiac Rhythm Management, which develops and manufactures implantable devices to treat cardiac abnormalities; and Electrophysiology, which develops and manufactures medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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