BSX - Embedded Expectations Analysis - 2020 07 09
Boston Scientific Corporation (BSX:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 30.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about profitability, growth, and clinical proceduresSpecifically, management may be concerned about further expenses from reducing inventory, the terms of the amended maximum leverage covenants, and their ability to effectively manage their operational expenses and cash position. Moreover, they may lack confidence in their ability to return to normalcy in FY 2021, improve revenues monthly, and continue to retain physicians. Furthermore, they may lack confidence in their ability to sustain revenue growth through BTG Interventional Medicines sales and regain shares in their pacemaker business. Additionally, they may be exaggerating the number of procedures using their Interventional Oncology products and may have concerns about the potential for recovery in their Cardiac Rhythm Management business driven by S-ICD replacements
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
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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