BSX - Embedded Expectations Analysis - 2021 06 11
Boston Scientific Corporation (BSX:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, and management is confident about their EPS growth, mitral valve treatment, and Preventice portfolioSpecifically, management is confident they are generating strong cash flow and achieving double-digit adjusted EPS growth and that operating margins will stay flat as they remain flexible with investment opportunities. Furthermore, management is confident the pacemaker market is approaching full penetration in terms of single chamber products and that an annuloplasty device is the most important foundation for treating mitral valve disease. In addition, they are confident their Preventice and LUX portfolios will serve as tailwinds in the coming years and that the combination of their Preventice portfolio and their ICM business provides a differentiated suite of diagnostic tools for physicians
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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