The yearly results for Boston Scientific Corporation (NYSE:BSX) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of US$11b were what analysts expected, Boston Scientific surprised by delivering a (statutory) profit of US$3.33 per share, an impressive 294% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Boston Scientific after the latest results.
After the latest results, the 20 analysts covering Boston Scientific are now predicting revenues of US$11.9b in 2020. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to nosedive 66% to US$1.16 in the same period. Before this earnings report, analysts had been forecasting revenues of US$12.0b and earnings per share (EPS) of US$1.29 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$49.32, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Boston Scientific, with the most bullish analyst valuing it at US$58.00 and the most bearish at US$32.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Boston Scientific shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Analysts are definitely expecting Boston Scientific's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 8.3% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 7.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Boston Scientific is expected to grow much faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Boston Scientific. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$49.32, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Boston Scientific analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Boston Scientific's balance sheet, and whether we think Boston Scientific is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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