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Boston Scientific’s Latest Valuation Metrics

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BSX’s forward valuation multiple

As of December 19, 2017, Boston Scientific (BSX) was trading at a 12-month forward PE (price-to-earnings) ratio of 18.4x. However, its forward PEG (price-to-earnings-growth) ratio is 1.65x. Its valuation has improved since the announcement of its 3Q17 earnings results on October 26, 2017. The company has a forward PE multiple of 17.2x and a forward PEG ratio of 2.7x as of December 1, 2017, after the stock fell due to the delay in the Lotus Edge device commercialization schedule.

Comparison with peers

As of December 19, 2017, Boston Scientific is trading at a higher forward PE multiple than its US medical device industry peers. Medtronic (MDT) and Zimmer Biomet Holdings (ZBH) have 12-month forward PE ratios of 16.3x and 14.8x, respectively. However, its 12-month forward PE multiple is lower than Abbott Laboratories’ (ABT) multiple of 20.1x. Boston Scientific and its peers Medtronic, Zimmer Biomet Holdings, and Abbott Laboratories make up 10.3%, 3.3%, and 9.4%, respectively, of the total portfolio holdings of the iShares US Medical Devices (IHI).

BSX’s growth expectations going forward

Despite Boston Scientific’s weak stock price performance in recent quarters, Wall Street is positive about the company’s future growth potential. As we saw in the previous parts of this series, about 80% of the analysts surveyed by Reuters have given BSX a “buy” rating.

In November 2017, Boston Scientific delayed the commercialization schedule of its much-awaited Lotus Edge device, which led to the stock taking a hit. The news also led to analysts taking a conservative view of the company’s financials going forward. To read more about the development, be sure to read How Might BSX’s Delayed LOTUS Edge Impact Its Performance?

Despite analysts factoring in a conservative outlook, Boston Scientific is expected to register performance growth going forward, driven by a number of recent strategic acquisitions, product launches, and a strong product pipeline. The company is investing in innovation and focusing on high-growth business areas. According to Wall Street analysts, Boston Scientific is expected to register a YoY (year-over-year) sales growth of 7.2% in fiscal 2017. Its adjusted diluted EPS (earnings per share) for fiscal 2017 is expected to be $1.26, representing a YoY rise of 13.1%.

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