Has Boston Scientific Run Too Far After Five-Year 155% Rally?

Thinking about what to do with Boston Scientific stock? You are not alone. Whether you have watched this healthcare giant deliver big gains over the past few years or are just taking a fresh look, it is a moment that invites a closer evaluation. Boston Scientific closed at $97.03 recently, and while the past week has seen it slip by 2.8% and the last month brought an 8.6% pullback, do not let these short-term dips cloud the bigger picture. Over the past year, Boston Scientific has climbed 15.5%. Zoom out even further and you will spot the real headline: a staggering 152.9% return over three years and 155.3% over five. This momentum speaks to solid business execution, product innovation, and the industry’s ongoing demand for advanced medical solutions. These are long-standing strengths for the company.

But price movement is just part of the story. When it comes to valuation, Boston Scientific currently scores a 1 out of 6 on our undervaluation checks. This signals that while it is not a screaming bargain by every traditional metric, the story is not black and white either. In the sections ahead, I will break down these common valuation approaches and, even more interestingly, share a perspective that goes beyond just ticking boxes on a checklist.

Boston Scientific scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Boston Scientific Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is really worth today by forecasting all the cash it is expected to generate in the future and then discounting those amounts back to the present. For Boston Scientific, the latest twelve-month Free Cash Flow stands at about $3.45 Billion. Analysts forecast healthy growth, projecting Free Cash Flow to reach $4.45 Billion by 2027. Further estimates looking a decade ahead see this figure climbing to roughly $7.2 Billion by 2035, based on extrapolated projections from available analyst data.

By calculating the present value of these expected cash flows, the DCF model suggests an intrinsic fair value for Boston Scientific of $79.32 per share. Compared to its recent share price of $97.03, this means the stock is trading at a 22.3% premium to its estimated value based on cash flows. In other words, Boston Scientific appears overvalued according to this approach.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Boston Scientific.

Our Discounted Cash Flow (DCF) analysis suggests Boston Scientific may be overvalued by 22.3%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Boston Scientific Price vs Earnings

For profitable companies like Boston Scientific, the Price-to-Earnings (PE) ratio is a go-to metric for valuing shares. The PE ratio tells us how much investors are willing to pay today for a dollar of the company’s current earnings, giving a straightforward snapshot of market sentiment around growth and profitability. In general, companies with higher earnings growth and lower risk command higher PE ratios, while those facing slowdowns or more uncertainty tend to see their multiples shrink.

Today, Boston Scientific trades at a PE ratio of 57.4x, well above the Medical Equipment industry average of 28.4x and also higher than the average of similar peers at 38.4x. At a glance, this premium could suggest overvaluation. But raw comparisons can miss the nuances that matter, such as Boston Scientific’s scale, profit margins, risk profile, and potential for sustained earnings growth.

This is where the Simply Wall St “Fair Ratio” comes in. The Fair Ratio is a proprietary metric, designed to factor in company-specific details including earnings growth projections, risk, profit margins, market cap, and industry context. Unlike basic benchmarks, this tailored approach helps investors gauge whether a company’s valuation is justified given its unique outlook. For Boston Scientific, the Fair Ratio stands at 35.9x, significantly below its current 57.4x PE.

Since the actual PE is much higher than both the Fair Ratio and its industry benchmarks, Boston Scientific appears overvalued by this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Boston Scientific Narrative

Earlier, we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a revolutionary approach that turns your financial analysis into a powerful investment story. A Narrative is your personalized perspective. It combines expected revenue growth, profit margins, and future earnings to explain why you think a company like Boston Scientific is worth a certain amount.

Unlike static checklists, a Narrative links the company’s story to a financial forecast and then to a fair value. This allows you to clearly see what assumptions drive your investment decision. Narratives are easy to create and share on Simply Wall St’s Community page, where millions of investors contribute their unique viewpoints. These are updated automatically as new earnings or news come in.

This tool empowers users to instantly see whether Boston Scientific’s current price is above or below their own calculated Fair Value, helping them decide to buy, hold, or sell with real conviction. For example, some investors (using our platform’s crowd-sourced insights) see Boston Scientific’s fair value at $140.00 per share, focusing on robust global expansion and advanced therapy adoption. More cautious community members estimate a fair value of just $99.00, weighing risks like cost pressures and intense competition.

Do you think there's more to the story for Boston Scientific? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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