Boston Scientific targets double-digit earnings growth

Boston Scientific (Marlborough, MA) is forecasting consistent double-digit earnings growth through 2020, the medical technology company told investors in New York City yesterday.

“Following strong financial results in 2016 and the first quarter of 2017, the company's goal is to achieve an organic revenue compound annual growth rate for 2018-2020 of six to eight percent and consistent double-digit adjusted EPS growth (excluding the negative impact of foreign currency) through ongoing operating margin improvement initiatives, as well as a differentiated five-year growth strategy intended to help reach a 25 to 26 percent adjusted operating margin in 2017 and 28 percent in 2020,” the company said in a press release issued ahead of the presentation.

To achieve these financial results, the company said that it would diversify into large, high-growth markets and expand outside the United States in both developed and emerging markets. Low-growth markets represented nearly 50% of sales in 2012, the company reported. The momentum progressively shifted, with moderate and high-growth markets representing approximately 60% of sales in 2016; they are projected to reach an estimated 75% of sales by 2020.

During the meeting, Boston Scientific provided an overview of current and planned product lines in the cardiovascular, rhythm management and surgical market segments. In particular, it announced that it expects to launch its Lotus Edge heart valve technology in Europe and will submit it for premarket approval in the United States by Q4 of this year. The company also said that it may invest in endoscopy technologies to the tune of $3.5 billion to enter new endoscopy markets.

While the endoscopy market is very competitive, it is estimated to grow at nearly 6% per year for the foreseeable future. As noted in an article, "Why Boston Scientific Continues To Invest In Endoscopy,” published by Forbes earlier this month, the company has faced "greater competitive pressure in some of its other key segments including interventional cardiology, pacemakers and defibrillators, which together account for nearly 50% of its valuation. The company has seen its market share decline significantly in these areas and it makes sense for it to invest in the growing endoscopic device market.”