FARAPULSE Launch And Acquisitions Will Strengthen Future Position In EP And Vascular Care

Key Takeaways

• Acquisition strategies and new product launches are set to drive revenue growth and enhance market penetration in urology and EP business.
  
• Innovative technologies and strategic reimbursements aim to elevate procedural efficiency, improve margins, and boost interventional cardiology and vascular care sales.
  
• Currency fluctuations and competition, along with potential acquisition and refinancing challenges, may impact Boston Scientific's financial performance and market growth prospects.

Catalysts

Develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide.

• The upcoming acquisition of Axonics is projected to bolster Boston Scientific's Urology business, indicating future revenue growth through expanded product offerings and market penetration.
  
• The planned commercial launch of FARAPULSE in Japan and anticipated entry into China in 2025 is expected to significantly enhance regional revenue streams and drive global EP business growth.
  
• The integration of new instruments such as FARAWAVE Nav Catheter and OPAL HDx Mapping System, alongside successful clinical outcomes, is anticipated to improve procedural efficiency and further elevate earnings through increased sales in interventional cardiology.
  
• The rollout of the concomitant WATCHMAN and catheter ablation reimbursement is projected to support revenue expansion and enhance net margins by optimizing procedural costs and amplifying market demand for combined treatments.
  
• The closure of the Silk Road Medical acquisition, introducing the TCAR system to Boston Scientific's portfolio, is expected to drive operational efficiency and increase margins through innovations in vascular care.

Boston Scientific Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Boston Scientific's revenue will grow by 11.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.3% today to 18.6% in 3 years time.
• Analysts expect earnings to reach $4.1 billion (and earnings per share of $2.74) by about December 2027, up from $1.8 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $2.7 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 43.4x on those 2027 earnings, down from 74.4x today. This future PE is greater than the current PE for the US Medical Equipment industry at 37.3x.
• Analysts expect the number of shares outstanding to grow by 0.53% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.61%, as per the Simply Wall St company report.

Boston Scientific Future Earnings Per Share Growth

Risks

• The company is experiencing currency fluctuations, which could continue to impact its margins and overall financial performance negatively.
  
• The acquisition of Axonics is pending, and any delay or failure to close could disrupt planned revenue growth and expected synergies.
  
• There is increased competition in the medical device market, particularly in the PFA segment, which could pressure Boston Scientific's market share and revenue.
  
• Recent VBP implementations in China could further challenge their revenue growth in that region.
  
• Debt refinancing at higher rates, as mentioned in relation to 2025, could increase interest expenses and impact net earnings.

Valuation

• The analysts have a consensus price target of $97.97 for Boston Scientific based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $116.0, and the most bearish reporting a price target of just $83.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $22.0 billion, earnings will come to $4.1 billion, and it would be trading on a PE ratio of 43.4x, assuming you use a discount rate of 6.6%.
• Given the current share price of $90.56, the analyst's price target of $97.97 is 7.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.