Today we're going to take a look at the well-established Boston Scientific Corporation (NYSE:BSX). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$45.51 at one point, and dropping to the lows of US$38.07. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Boston Scientific's current trading price of US$41.43 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Boston Scientific’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Boston Scientific?
According to my valuation model, Boston Scientific seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Boston Scientific today, you’d be paying a fair price for it. And if you believe that the stock is really worth $48.51, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Boston Scientific has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Boston Scientific generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 98% over the next couple of years, the future seems bright for Boston Scientific. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BSX’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on BSX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Boston Scientific has 3 warning signs we think you should be aware of.
If you are no longer interested in Boston Scientific, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.