Boston Sci Lays Out Growth Goals

Earnings and revenue for the fourth quarter are a little shy of Wall Street's estimates.
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Updated from 8:54 a.m. EST

Boston Scientific

(BSX) - Get Report

disappointed Wall Street Tuesday, saying its quarterly results fell just short of estimates as sales of coronary stents took a beating.

For the latest fourth quarter, stent sales were $640 million compared with $730 million in the year-earlier period. U.S. Taxus stent sales took a significant hit, dropping to $398 million from $503 million a year ago.

Worldwide Taxus sales were $606 million, down from $691 million a year earlier, the Natick, Mass., company said Tuesday. Overall sales came in at $1.54 billion compared with $1.6 billion a year ago and $1.55 billion analysts expected.

Despite the decline, Boston says its share of the stent market was gaining momentum by the end of the year, which should bode well for 2006.

All told, the medical-device maker's net income for the quarter was $334 million, or 40 cents a share. Boston Scientific, which is planning to buy fellow heart-instruments maker

Guidant

(GDT)

for $27 billion after

prevailing in a bidding war with

Johnson & Johnson

(JNJ) - Get Report

, earned 35 cents in the year-ago quarter.

Excluding certain charges, the company had a profit of 41 cents a share, compared with analysts' expectations of 42 cents. Boston took charges of 14 cents a share for costs related to stock-option modifications and its repatriation of $1 billion of overseas earnings under the American Jobs Creation Act.

While the Natick, Mass., company declined to provide 2006 guidance until it closes the Guidant acquisition, it expects to see a 20% annual earnings growth rate from 2007 to 2011. That outlook might come as welcome news to the analysts who expressed concern about the dilutive effect the Guidant purchase could have on Boston's earnings per share in the near term.

Specifically, Boston forecast a profit of around $1.52 in 2007, the first full year for the combined firm. The company then predicted earnings of $1.98 in 2008, and said its bottom line should grow steadily in the following years to reach $3.13 a share in 2011.

Regarding a

warning letter Boston received from the Food and Drug Administration last month on its quality standards and practices, Chief Financial Officer Larry Best said the company's products themselves aren't at issue, but that its policies on handling complaints aren't adequate.

The company met with the FDA on Friday to discuss its quality controls. "It's an embarrassment to get a letter of this nature," Boston said. Executives know what they have to do to resolve the matter, and "if we hold up our end they will acknowledge that and we can move forward."

Boston Scientific's shares rose 12 cents to $21.74 Tuesday.

The company expects to hold an analysts' meeting one to two months following the close of the Guidant transaction. Boston is planning to wrap up the acquisition by the end of the first quarter. The company expects to launch its new Liberte stent in October.