What To Expect From Boston Scientific Earnings (BSX)

On Tuesday morning, we’ll get to see earnings out of Boston Scientific Corp. (NYSE:BSX). The estimates from First Call for the medical device developer are $0.09 EPS on $2.13 billion in revenues.  Estimates for fiscal 2008 are $0.50 EPS on $8.21 billion in revenues.

It is a bit interesting that shares are suddenly up 5% late Monday morning to $13.00 today, and we’d probably attribute most of this to short covering as many traders have been betting against this one for longer than investors would want to remember (41.9 million shares short on last look). 

Analysts have an average price target north of $15.00, and we’d be the first to note that this one is now up about 20% from recent lows put in just on January 9, 2008.  We are choosing not to use options as an indicator because of the low share price and because of conflicting calculations ($0.20 expected, versus another $1.10 calculation).

This chart has surprisingly been recovering while no real sentiment has changed on Wall Street.  Banc of America raised its rating to a BUY in mid-January after a 15-month period of negative ratings.  BSX stock has gotten back above its 50 day moving average of $12.07.  Its 200-day moving average is roughly $13.84.  This chart is starting to look more interesting than the story of recent years.

The company has already announced major layoffs expected.  That isn’t enough.  We recently called CEO James Tobin one of ten CEO’s in America that needs to be fired.  We still think it highly possible that company will either break itself up or will look at more divestitures.  There is also a real chance here that the company will continue small sales here and there.

Boston Scientific Corp’ 52-week trading range is $10.76 to $18.47.  Shares were over $40 in 2004, so at $13 or at $15 or at $18 there are still going to be many unhappy campers here that have owned BSX shares.

Jon C. Ogg
February 4, 2008