JMP Bullish On Boston Scientific: 'Strong Execution and Improved Results in Core Businesses' Will Continue To Drive Growth

In a report issued Thursday, JMP Securities analyst J.T. Haresco, III, PhD commented on Boston Scientific Corporation BSX following its earnings report Wednesday afternoon. Although the company posted in-line fourth-quarter earnings and issued a weak guidance, the firm reiterated a Market Outperform rating on the stock and raised its price target from $15 to $17.

JMP sees “strong execution and improved results in core businesses” as the main drivers of fiscal 2014’s solid growth. Cardiovascular grew 10 percent year-over-year, global DES expanded 12 percent, and “WATCHMAN, which is now approved in 70 countries, grew 30% y/y. Management believes that the company has gained market share in global CRM for FY14.” Moreover, the firm expects these improved results to continue into 2015.

For the fourth quarter in particular, growth was driven by “above-market growth across almost all business segments, led by a diversified product portfolio, improved positioning in core markets, and strong progress on growth initiatives.”

Clinical Achievements In Fiscal 2014

The report also highlights some clinical achievements in fiscal 2014. During the year, Boston Scientific completed: “1) the first U.S. implant of the Extended Longevity (EL) implantable cardioverter defibrillators, including DYNAGEN EL and INOGEN EL device models which feature EnduraLife battery technology, designed to last nearly 12 years, and 2) the first U.S. procedures with the Symphion System, indicated for the hysteroscopic removal of intra-uterine fibroids and polyps.”

Some Growth Drivers And Clinical Milestones For 2015

Haresco points out the continuing global expansion of SYNERGY and PREMIER DES systems and the ongoing enrollment of patients in the REPRISE III clinical study for the FDA approval of the LOTUS transcatheter valve.

In addition, Haresco says, the company expects FDA approval for the WATCHMAN device in the second half of 2015. Furthermore, “De novo ICD share in the U.S. continues to grow (#2), despite replacement headwinds due to the performance of the industry-leading battery longevity. Management expects continued momentum in 2015, with the growing body of clinical evidence. S-ICD saw a strong adoption in 2014 and exceeded the company's full-year goal of $100M. This trend should continue into 2015, in our view. Management is making strides with positive reimbursement, with the expansion of the

S-ICD reimbursement coverage with improved Medicare outpatient rates and new commercial coverage, including TRICARE, following the recent Aetna approval last November.”