Why Boston Scientific (BSX) Jumped Today

NEW YORK (TheStreet) -- Boston Scientific  (BSX) jumped as much as 4% during Thursday's session before settling 2.7% higher to $11.48. The day's gains are the latest in a year which has seen the stock climb 100.4%.

Sparking demand during the trading day, the Natick, Mass.-based business received support from a Food and Drug Administration advisory panel for its Watchman device, a technological treatment to prevent stroke in patients prone to irregular heartbeats. The panel voted favorably in majority, 13-to-1, noting that the device's benefits outweighed its risks.

The FDA will take into consideration the panel's findings and a decision on the device's approval will likely come in the first half of 2014.

The Watchman device is a heart implant nestled in a patient's left atrial appendage and works to prevent the migration of blood clots, a factor in the incidence of stroke and embolisms in high-risk sufferers of atrial fibrillation.

To date, a common treatment in preventing strokes is a blood-thinning warfarin therapy. However, despite its proven benefits, it can lead to bleeding complications after long-term use.

"We are pleased with the outcome of today's panel, which represents an important milestone toward making this innovative technology available to patients with atrial fibrillation (AF) at higher risk for stroke who need an alternative to long-term warfarin therapy," said Boston Scientific's Chief Medical Officer Kenneth Stein in a statement.

TheStreet Ratings team rates Boston Scientific Corp as a Buy with a ratings score of B-. The team has this to say about their recommendation:

"We rate Boston Scientific Corp (BSX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, compelling growth in net income, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BSX's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 0.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 100% and other important driving factors, this stock has surged by 103.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 99.2% when compared to the same quarter one year prior, rising from -$664.00 million to -$5 million.
  • The gross profit margin for Boston Scientific Corp is currently very high, coming in at 73.14%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.28% is in-line with the industry average.
  • Boston Scientific Corp reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Boston Scientific Corp swung to a loss, reporting -$2.87 a share vs. 29 cents a share in the prior year. This year, the market expects an improvement in earnings (45 cents vs. -$2.87).
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