Boston Scientific (BSX) stock drops on weak Q4 preliminary revenue

Boston Scientific Corporation (NYSE: BSX) stock dropped over 6% on Tuesday after its preliminary fourth-quarter report. The shares have fallen over 5% in the past month and over 7% in the past five days despite rising over 20% in the past year. Investors remained concerned about the weakness that could lower the growth.

For the fourth quarter, Boston Scientific now expects revenue to grow about 13.4% to $2.9 billion and earnings to exceed its previous forecast range of $0.22-0.25 per share. Adjusted earnings are now anticipated to be within the previous range of $0.42-0.45 per share. Analysts had forecast EPS of $0.44 on revenue of $2.93 billion.

For fiscal 2019, sales are projected to grow about 9.3% to $10.74 billion and earnings to exceed its previous estimates range of $0.72-0.75 per share. Adjusted earnings are predicted to be within the prior range of $1.55-1.58 per share. The consensus estimates EPS of $1.57 on revenue of $10.76 billion.

The preliminary bottom-line results were based on a significant non-cash tax benefit arising from an intra-entity asset transfer of intellectual property completed in the fourth quarter of 2019. The company has experienced more of a benefit accruing in the third quarter than the fourth quarter.

During the quarter, the company’s peripheral business is likely to slow due to tough comp from the Alluvia launch in the US a year ago and also a competitor to manufacturing issues. Also, a change of a distributor in Japan could slow the peripheral business.

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The market experts believe that the company could be benefited from the continued solid momentum and likely to meet expectations for the fourth quarter. However, there could be a little bit of slowdown due to the recognition of sales upon cash collection, lumpier emerging markets, minor revenue recognition, and lesser benefits from the stocking.

On the operating margins standpoint, the company believes that its really diversified strength across the portfolio of all seven businesses as well as region-wise could show good performance during the quarter. The company is expected to release its final results and business highlights for the fourth quarter on February 5.

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