Should You Buy Boston Scientific Stock Over Its Industry Peer?

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we think that Boston Scientific Stock (NYSE:BSX) is currently a better pick than its industry counterparts, Medtronic Stock (NYSE:MDT), despite being the more expensive of the two, is trading at 5.3x trailing revenue compared to 4.4x for Medtronic. Even if we look at the P/EBIT ratio, BSX stock appears to be more expensive with 123x P/EBIT ratio as compared to 82x for MDT stock. This gap in valuation can be attributed to Boston Scientific’s improved revenue growth, a trend likely to continue, as we discuss in the sections below. We compare multiple factors such as historical revenue growth, returns and valuation multiples in an interactive dashboard analysis Boston Scientific vs Medtronic, Which stock is the better bet? The excerpts of the analysis are summarized below.

1. Boston Scientific’s Revenue Growth Is Strong

  • Boston Scientific’s sales have increased from $8.4 billion in 2016 to $11.5 billion in the past twelve months, while Medtronic’s revenue has increased from $29.7 billion in fiscal 2017 to $31.8 billion in the past twelve months.
  • In addition, Boston Scientific’s revenue growth of 13.5% over the past twelve-month period is comparable with 14.1% growth for Medtronic. After seeing lower sales in 2020 due to the impact of the pandemic, both the companies have seen a rebound in sales in the recent quarters.
  • Looking at the slightly longer time frame, both companies have seen slow growth in sales. That said, Boston Scientific’s last three-year revenue CAGR of 3.4% is better than Medtronic’s 0.3% CAGR.
  • Looking ahead, with economies opening up, the demand for medical devices is likely to remain high in the near future, augurs well for both companies’ revenue growth. Also, the launch of new devices will boost revenue growth.
  • Boston Scientific’s left atrial appendage closure device — the WatchMan — continues to gain market share driven by high physician usage rates for now, but is expected to face increasing competition from the likes of Abbott going forward. For Medtronic, there are high hopes for its most advanced insulin pump system — the MiniMed 780G — to drive sales of its diabetes products forward. Product not yet approved in the US Boston Scientific Revenue And Medtronic Revenue The dashboard provides more information on the revenue and segments of the companies.
  • Boston Scientific’s revenue is expected to grow at a faster rate than Medtronic’s. The table below summarizes our revenue expectation for BSX and MDT over the next three years, and points to a CAGR of 6.5% for Boston Scientific, compared to a CAGR of 2.1% for Medtronic.
  • Note that we have different methods for companies negatively impacted by COVID, and for companies that have not been impacted or positively impacted by COVID, while forecasting future revenue. For companies negatively impacted by COVID, we consider the quarterly revenue recovery trajectory to estimate recovery of the pre-Covid revenue run rate, and beyond the recovery point, we consider a return to normal conditions under COVID-19. Let us apply the average annual growth observed in the first three years. , For companies reporting positive revenue growth during Covid, we consider pre-Covid average annual growth, with growth during and over the past twelve months.

2. Medtronic is more profitable and has better cash position

  • Medtronic’s operating margin is 5.3% over the past twelve-month period, which is slightly better than Boston Scientific’s 4.3%.
  • Also, if we look at recent margin growth, both companies have seen negative growth, with margin changes for the past twelve months versus the last three years compared to -3.5% for Boston Scientific, -12% change for Medtronic. In.
  • Looking at financial risk, Boston Scientific’s 15% debt as a percentage of equity is less than 18% for Medtronic, while the latter’s 12% cash as a percentage of assets exceeds 6% for Boston Scientific, whose Meaning BSX has better debt position, but MDT stock has better liquidity position.

3. Net Of It All

  • We see that revenue growth in recent quarters has been similar for both companies, while for Boston Scientific it has been strong over the long term. However, Medtronic is more profitable, has a better cash position, and is trading at a comparatively lower valuation.
  • Nevertheless, looking at the future prospects, using P/S as the basis, due to high volatility in P/E and P/EBIT, we believe BSX to be the better option . The table below summarizes our revenue and return expectation for BSX and MDT over the next three years, and points to an expected return of 18% for the BSX over the period versus just 7% for MDT, whose Which means investors are better off buying BSX. MDT based on our Dashboard – Boston Scientific vs Medtronic – which provides more detail about how we arrive at these numbers.
  • Note that due to the spread of more contagious virus forms and infections in many geographies, including the US and Europe, COVID-19 is proving more difficult than initially thought, compared to a few months ago. Concerns about Omicron have largely rocked the markets. If this large increase in COVID-19 cases from the new version we’re seeing recently is the result of disruption to healthcare, it’s likely to impact sales growth for both Boston Scientific and Medtronic.

While BSX stock may outperform MDT, the COVID-19 crisis has created several pricing discontinuities that can provide lucrative trading opportunities. For example, you’d be surprised how intuitive it is to approach stock valuations. Medtronic vs Moscow,

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