The worst seems to be over for Boston Scientific. Is the stock a buy?

The pandemic has had a mixed impact on the healthcare sector since its outbreak more than a year ago, putting the emergency care department into overdrive while slowing down the elective procedures. After a dull phase that lasted for several months, Medical device manufacturer Boston Scientific Corp. (NYSE: BSX) is counting on the positive macroeconomic cues and vaccination drive to regain the lost strength.

Investing in BSX

While the stock looks cheap, prospective investors will be keeping an eye on the price movement to see if the recent gains are sustainable. A section of experts following the company is bullish on its future performance, thanks to statistics indicating resumption of elective therapeutic procedures and hospital visits. The target price represents a 7% gain. Also, the company has a decent market share and remained consistently profitable. On the flip side, the stock’s past performance has not been very exciting as it often failed to stay on the growth path.

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Read management/analysts’ commens on Boston Scientific’s Q4 report

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It is estimated that the post-pandemic healthcare scene would be much different from what it is now. Boston Scientific’s broad product portfolio and strong customer base – comprising patients and healthcare professionals from across the globe – should come in handy for it while adapting to the new trend. The international market accounts for about half of the company’s annual sales — in the key segments including cardiovascular, endoscopy, and urology.

Cost Pressure

Overall, the company’s growth prospects were hit after it terminated the Lotus Edge heart valve program last year amid delivery-related concerns. Also, margins have come under pressure from elevated selling costs.

Meanwhile, adding to optimism that better days are coming, the company recently secured FDA approval for some of its healthcare equipment, which can positively influence sales in the future. Also, there are indications that procedure volumes are returning to the normal levels, though at a slow pace.

From Boston Scientific’s Q4 2020 earnings conference call:

“The high acuity nature of our portfolio, multiple product launches, and a diminishing impact from the COVID-19 pandemic shall help BSC to execute well and significantly improve performance in ’21. We will continue to execute our category leadership strategy and diversify the portfolio in high-growth markets like the Preventice acquisition, which is expected to add exciting growth in diagnostics platform with excellent long-term prospects. This deal is the latest example of our strengthened balance sheet and compelling venture portfolio, which enables us to continue to develop multiple high growth market opportunities.”

Challenging Q4

In the fourth quarter, earnings nearly halved from the prior year to $0.23 per share and missed expectations as cancellation/deferral of elective procedures dragged down the top-line. Revenues dropped 6.8% to $2.7 billion, amid dismal organic sales performance, and came in line with the consensus estimates.

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Abbott’s stock can give high returns, thanks to COVID tailwinds

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For Boston Scientific, 2021 has been a promising year so far, with its market value rising steadily since early January and the stock moving closer to the peak. But the shares underperformed the market this week and closed Wednesday’s session at $39.67.