Boston Scientific downgraded on recent share rise
NEW YORK (AP) — A Citi Investment Research analyst downgraded shares of Boston Scientific Corp. Monday as the medical device maker's stock traded around three-year highs.
THE OPINION: Analyst Matthew Dodds lowered his rating to "Neutral" from "Buy," noting that Boston Scientific shares have surged in 2013 and saying the stock is now trading at a premium compared with competitors St. Jude Medical Inc. and Medtronic Inc. He said that's because investors have taken a very positive view of the company's pipeline of products, including a new implantable heart device and a new treatment for atrial fibrillation, a type of irregular heartbeat.
"(The higher price is) not via fundamentals, as first-quarter results were below average and second-quarter is also expected to be difficult," said Dodds. "Instead, Boston Scientific appears to be largely driven by rising expectations for the company's pipeline, including a near-term U.S. contribution from the S-ICD and Watchman devices."
However Dodds said the company's stock price now reflects the value of its pipeline. While sales of the new products could surpass $900 million by 2017, he said most of that growth will only serve to counteract declining sales of older products. He said Boston Scientific will report lower sales growth than its competitors over that period.
THE STOCK: Shares of the Natick, Mass., company lost 9 cents to $9.22 in midday trading. The stock climbed 62 percent in the first half of the year, rising to $9.75 in June. That was its highest price since January 2010.