How Will Boston Scientific (BSX) Stock Respond To This Coverage Initiation?

NEW YORK (TheStreet) -- Boston Scientific Corp.  (BSX) had coverage initiated today with a "neutral" rating and a $13.50 price target at Sterne, Agee & Leach.

Shares of Boston Scientific closed yesterday at $12.97.

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TheStreet Ratings team rates BOSTON SCIENTIFIC CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BOSTON SCIENTIFIC CORP (BSX) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • BOSTON SCIENTIFIC CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 continued to lose money by earning -$0.08 versus -$2.87 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$0.08).
  • BSX's debt-to-equity ratio of 0.65 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.93 is weak.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market on the basis of return on equity, BOSTON SCIENTIFIC CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 96.9% when compared to the same quarter one year ago, falling from $130.00 million to $4.00 million.
  • You can view the full analysis from the report here: BSX Ratings Report
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