Boston Scientific Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Boston Scientific Corporation (NYSE:BSX) posted lower net income in the third quarter compared with a year-earlier period. Boston Scientific provides devices used in medical procedures related to disciplines such as cardiology, endoscopy, gynecology, and electrophysiology.

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Boston Scientific Earnings Cheat Sheet for the Third Quarter

Results: Net income for the medical instruments and supplies company fell to $142 million (9 cents per share) vs. $190 million (12 cents per share) a year earlier. This is a decline of 25.3% from the year earlier quarter.

Revenue: Fell 2.2% to $1.87 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BSX reported adjusted net income of 15 cents per share. By that measure, the company beat the mean estimate of 8 cents per share. Analysts were expecting revenue of $1.91 billion.

Quoting Management: “Boston Scientific’s earnings performance remains strong, despite very challenging global economic and end-market conditions that adversely impacted revenue,” stated Hank Kucheman, Chief Executive Officer of Boston Scientific Corporation. “The execution of the Company’s POWER strategy is the right top priority for the entire leadership team.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 10 cents in the first quarter, and by 10 cents in the fourth quarter of the last fiscal year.

Gross margin shrank 3.8 percentage points to 63.7%. The contraction appeared to be driven by increased costs, which rose 9.1% from the year earlier quarter while revenue fell 2.2%.

Revenue fell last quarter after seeing a rise the quarter before. Revenue rose 2.4% to $1.98 billion in the second quarter from the year earlier.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 9 cents a share to 10 cents over the last ninety days. For the fiscal year, the average estimate has moved up from 40 cents a share to 45 cents over the last ninety days.

Competitors to Watch: Medtronic, Inc. (NYSE:MDT), St. Jude Medical, Inc. (NYSE:STJ), Merit Medical Systems, Inc. (NASDAQ:MMSI), C.R. Bard, Inc. (NYSE:BCR), Abbott Laboratories (NYSE:ABT), Johnson & Johnson (NYSE:JNJ), Stryker Corporation (NYSE:SYK), Teleflex Incorporated (NYSE:TFX), AngioDynamics, Inc. (NASDAQ:ANGO), and The Spectranetics Corp. (NASDAQ:SPNC).

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(Source: Xignite Financials)