Boston Scientific: Cutting Edge Medical Devices

08/09/2018 5:00 am EST


Jimmy Mengel

Editor, Outsider Club

When it comes to biotechnology companies, Boston Scientific (BSX) is a major player that has been at the center of a revolution in medical devices and accessories over the past half century, observes Jimmy Mengel, editor of The Crow's Nest.

Just about every kind of cutting-edge device that is used in modern medicine to intervene and alleviate life-threatening conditions probably has a Boston Scientific product at the forefront.

Think defibrillators, pacemakers, stents, remote patient monitoring systems, scopes for minimally invasive surgery and diagnostics, implanted bioabsorbable drug delivery systems, and brain and neurological stimulation systems.

Those are just some of the critical devices that are critical to saving lives. Boston Scientific has a wide list of high-quality pulmonary, urology, electophysiology, gastrenterology, gynecology, cardiology, radiology, neurological, orthopedic, and vascular products.

In short, Boston Scientific offers an extremely broad portfolio of products for sale, with a core of cutting-edge R&D behind its high-margin, patent-protected, internationally marketed devices.

The last decade has seen a host of ground-breaking medical devices and accessories rolled out. Nearly $1 billion was invested in R&D to fuel future growth, and the 2-year suspension of the medical device tax in the US. that started in January 2018 is helping to extend these large investments in future revenue generators.

The company voluntarily recalled the Lotus Valve System from the European and U.S. markets, and tentatively plans a 2019 reintroduction. Technical and regulatory hurdles may crop up, and could have a modest impact on share prices on good or bad news.

However, Boston Scientific has proven itself to be more than capable of standing its own, and the rapid expansion of the markets it serves all but guarantees revenue expansion in the years to come.

Coupled with management’s track record of improving its books, especially operating margins and cash flows, we’ll be vigilant but not too worried about short- and mid-term performance. Boston Scientific is a great short and potential long-term prospect for us.

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