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Boston Scientific

(BSX) - Get Report

is attempting to get back on track in 2009. At Wednesday's closing price of $8.68, the stock is up 12% year to date. The company posted strong fourth-quarter results on Jan. 28, and that even prompted two analyst upgrades.

That said, Boston Scientific is probably best known for paying $25 billion back in April 2006 for fellow medical instruments maker Guidant, a deal that turned sour after demand for drug-eluting stents fell on safety fears. As a result, the stock is down 60% since the deal went through.

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With that in mind, I'm here to answer readers' questions: Is Boston Scientific on the verge of a meaningful turnaround, or will the stock remain stuck in the single digits?

Overall, the company's fourth-quarter numbers were strong. Boston Scientific earned 21 cents a share in the fourth quarter, which was 8 cents ahead of the consensus analyst estimate. Revenue fell 7% from the previous year to $2 billion, matching expectations.

The company reached some important milestones in the fourth quarter. For one, year-over-year growth in the drug-eluting stent market, where Boston Scientific has almost 50% market share, returned to positive territory following a 23% decline in 2007 because of safety concerns.

Additionally, the company took market share in the implantable defibrillator business with the sales ramp of two new products. It's worth noting that as opposed to some other areas of health care, a lot of Boston Scientific's products are not part of elective procedures, an area that could decline in the current economic environment.

Looking ahead to the first quarter of 2009, management expects earnings of 15 to 20 cents a share, ahead of the previous consensus analyst profit estimate of 14 cents. Excluding the effect of currency, the company is targeting mid-single-digit revenue growth in 2009 and double-digit profit gains.

One lasting memory of the Guidant deal and a major red flag hanging over the stock is the $6.7 billion of debt on the company's balance sheet. That said, Boston Scientific has prepaid $2.2 billion of total debt over the past 18 months.

The company ended 2009 with $1.6 billion of cash on hand, and faces its next debt maturity of $825 million in April 2010. Over the past year, Boston Scientific averaged $286 million of quarterly free cash flow.

At the end of the day, I believe that investors should buy Boston Scientific at current levels for its turnaround potential. The company is carrying strong top-line momentum into 2009 with its two largest divisions, and which management can leverage into double-digit earnings growth with cost-cutting.

As a result, I believe the stock could trade back up through $10 to $12 over the coming quarters.

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Know what you own: Other medical-device makers include Johnson & Johnson (JNJ) - Get Report, Medtronic (MDT) - Get Report, St. Jude Medical (STJ) , Edwards Lifesciences (EW) - Get Report, Baxter International (BAX) - Get Report and Wyeth( WYE).

David Peltier is a research associate at TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback;

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