Boston Sci Sees Slowdown

The stock slips as the company warns that its blockbuster growth won't continue.
Publish date:

Updated from 10:51 a.m.

Boston Scientific

(BSX) - Get Report

shares slid more than 3% Tuesday after the company toned down growth expectations.

The Natick, Mass., stent maker posted first-quarter earnings that were in line with Wall Street expectations. Earnings rose to $358 million, or 42 cents a share, from the year-ago $194 million, or 23 cents a share. Excluding charges, latest-quarter earnings were 51 cents a share, even with the Thomson First Call analyst consensus estimate.

Revenue rose 49% from a year ago to $1.615 billion, in line with estimates. Sales rose 47% excluding currency fluctuations.

Boston's worldwide coronary stent sales for the first quarter were $721 million, slightly lower than some analysts expected but still up 154% on a year ago. Drug-eluting Taxus stent sales amounted to $686 million, or 95% of the company's overall sales.

"This was another record quarter, thanks in large part to the ongoing success of the Taxus Express2 paclitaxel-eluting coronary stent system," CEO Jim Tobin said. But he didn't offer any 2005 guidance, saying only that the company expects more moderate growth in coming quarters.

In its conference call Tuesday morning, the company reported ending the quarter with 61% of the drug-coated stent market. Also reporting earnings Tuesday was

Johnson & Johnson

(JNJ) - Get Report

, which says it made up 38-40% of the market.

After data released at American College of Cardiology in March suggested to some observers that Johnson & Johnson's Cypher stent performed better than Boston's Taxus, Boston's market share dipped from 63% to the mid-to-upper 50s. "We think the market viewed those claims with a great degree of skepticism," said Paul LaViolette, Boston's chief operating officer.

Boston's efforts to maintain share have relied in part on supply constraints on JNJ's stents, due to production delays. Boston has also been hurt by the lower price of the Cypher stent. Boston Scientific says Taxus stents are priced $125 higher than Cyphers, but the gap has narrowed and the company believes it can gain share.

Boston says it is also a leader in the stent market outside of the U.S., despite its lack of presence in Japan, which the company admits is a significant growth market. Boston says it's on track for Japan launch in the second half of 2006.

Boston Scientific fell $1.15 Tuesday to $29.60.