Boston Scientific: RBC's Channel Checks Point To Upside Not Baked In Stock Price

The launches of Synergy and Watchman by Boston Scientific Corporation BSX appear ahead of plan. RBC Capital Markets’ Glenn Novarro maintained an Outperform rating for the company, while raising the price target from $20 to $22.

Boston Scientific is a “multiyear growth story,” driven by its near-term product cycle, which is expected to result in incremental share gains in the CRM, structural heart, and drug-eluting stent [DES] markets, as well as mid-single-digit revenue growth, analyst Glenn Novarro said. He also expects the company to generate low-to-mid-teens EPS growth, ahead of the industry average, backed by continued operating margin expansion.

Share Gain

Recent checks indicate that both the Synergy and Watchman launches are tracking ahead of plan, which is expected to lend upside to the consensus estimates for 2016, Novarro commented.

Management announced that Synergy comprised over 40 percent of Boston Scientific’s global stent mix in February. The analyst expects Synergy to constitute 50 percent of the mix by April/ May.

“Based on our 2016 Interventional Cardiology survey, we expect the US Synergy/Promus franchise to gain an incremental ~500bps of share in the US DES market in 2016. The faster than expected rollout of Synergy gives us confidence that management should be able to deliver WW total company revenue growth at the high end of its 2016 guide (+4-7% y/y organic),” Novarro wrote.

The RBC Capital Markets report added that the company was on track to opening an additional 100 Watchman centers in 2016 and to generate full-year structural heart revenues of ~$175-$200M.