Why Boston Scientific Shares Could Rise Almost 40% More as Turnaround Continues

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Boston Scientific Corp. (NYSE: BSX) was seemingly on the long way down, until 2013 when the stock kicked into gear and became one of the standout turnaround stories. The stock has actually gained over 200% from the start of 2013, but some analysts think there are even more gains to be had at this company. If the independent research firm Argus is correct, then Boston Scientific shareholders could see an upside of roughly 40% from this current price level.

Argus upgraded the stock to a Buy rating from Hold with a $33 price target. Keep in mind that the highest price target from the Thomson Reuters universe was $31. The firm noted that Boston Scientific generated strong sales in the second quarter, with growth of more than 10% in five product segments. In addition, it recently launched a new MRI-compatible pacemaker, which is helping it to gain share in the pacing market. Argus believes that these gains are sustainable.

Boston Scientific launched its MRI-compatible pacemaker in April that has helped the company gain share in the pacer market. Data from the Millennium Research Group shows that it is gaining market share from Medtronic. And Boston Scientific could continue to gain share until St. Jude Medical launches its own MRI-compatible pacer at the end of 2016.

The independent research firm is looking forward to updates on the contribution to sales and earnings of American Medical System. The $1.65 billion cash acquisition of AMS was the company’s largest since the purchase of Guidant in 2006. AMS makes products that treat urologic conditions, including benign prostatic hyperplasia, male stress urinary incontinence and erectile dysfunction.

Management raised its guidance for 2016. It now expects sales in the range of $8.270 billion to $8.370 billion, up from the previous range of $8.075 billion to $8.225 billion, as well as EPS in the range of $1.07 to $1.11, up from $1.06 to $1.10.

As a result of the raised guidance, Argus increased its EPS estimates to $1.11 from $1.08 for 2016 and to $1.27 from $1.20 for 2017. The EPS consensus estimates for 2016 and 2017 are $1.10 and $1.26, respectively.

Shares of Boston Scientific were trading at $24.16 on Thursday, with a consensus analyst price target of $27.26 and a 52-week trading range of $15.67 to $24.79.

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