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Boston Scientific Expects Robust Margin Expansion in Future Years

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Operating margin guidance

On its third-quarter earnings conference call, Boston Scientific (BSX) said that it expected its adjusted operating margin to contract in the range of 25.5%–25.75% in 2018, marking a YoY (year-over-year) improvement of 50–75 basis points. The company also expects to report YoY improvements of 50–100 basis points in its adjusted operating margin in 2019 and 2020.

According to Boston Scientific’s 37th Annual J.P. Morgan Healthcare Conference investor presentation, the company is focused on expanding its adjusted operating margin to 30% beyond 2020.

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Analysts expect Boston Scientific to report an operating margin of 18.87%, a YoY contraction of 56 basis points, in 2018. The company is also expected to report an operating margin of 21.61%, a YoY expansion of 274 basis points, in 2019. Boston Scientific is expected to report an operating margin of 22.34%, a YoY expansion of 73 basis points, in 2020.

Gross and net income margins

On its third-quarter earnings conference call, Boston Scientific said that it expected its adjusted gross margin to be 72% in 2018 assuming the negative impact of 80 basis points attributable to foreign currency fluctuations.

Analysts expect Boston Scientific to report an adjusted gross margin of 72.09%, a YoY fall of 62 basis points, in 2018. The company is expected to report an adjusted gross margin of 72.49%, a YoY rise of 40 basis points, in 2019. It’s expected to report an adjusted gross margin of 72.77%, a YoY rise of 28 basis points, in 2020.

Analysts expect Boston Scientific to report an adjusted net income margin of 19.82%, a YoY rise of 46 basis points, in 2018. The company is expected to report an adjusted net income margin of 20.81%, a YoY rise of 99 basis points, in 2019. It’s expected to report an adjusted gross margin of 21.96%, a YoY rise of 115 basis points, in 2020.

In the next article, we’ll discuss Boston Scientific’s 2018 expense trajectory in greater detail.

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