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A Look at Boston Scientific’s Latest Valuation

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Valuation multiples

After the release of its 2Q16 earnings results on July 28, 2016, Boston Scientific (BSX) was trading at a forward PE (price-to-earnings) multiple in the range of 20.6x–21.7x. Forward PE measures a company’s growth and is calculated by dividing its stock price by its earnings estimates for the next 12 months.

On August 18, 2016, Boston Scientific was trading at a forward PE of 21.7x, higher than its peers St. Jude Medical (STJ), Medtronic (MDT), and Zimmer Biomet Holdings (ZBH). The above graph compares the forward PEs of Boston Scientific and its peers.

Investors interested in diversified exposure to Boston Scientific can consider the iShares Core S&P 500 ETF (IVV). BSX accounts for ~0.17% of IVV’s total holdings.

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Boston Scientific has a strong product portfolio and a leading market position in a number of product segments. However, the company has significant debt on its balance sheet due to its recent acquisitions. Boston Scientific has witnessed growth in revenue recently due to its various reorganization and cost containment initiatives.

Boston Scientific’s share price movement

Boston Scientific’s stock was trading at $23.9 on August 17, 2016. It has a 50-day moving average of $23.8 and a 200-day moving average of $20.9. On July 28, 2016, Boston Scientific was trading at a 52-week high of $24.8. The stock was trading at a 52-week low of $14.2 on August 24, 2015.

The company’s share price rose by ~0.6% after the release of its 2Q16 earnings on July 28, 2016. The price rise was triggered by growth in revenue, new product launches, and updated 2016 guidance.

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