Boston Scientific is Wednesday's IBD Stock Of The Day. Shares are breaking above a short-term trendline at their 50-day moving average after the company's "dynamic duo" helped deliver a second-quarter beat.
The medical devices company walloped forecasts for the June quarter thanks to its Farapulse and Watchman products. Farapulse uses pulsed field ablation technology to treat abnormal heart rhythm disorders. Watchman is an implantable device to help reduce the risk of strokes in some patients.
"FARAPULSE and WATCHMAN remained BSX's primary growth drivers," Needham analyst Mike Matson said in a report to clients.
Boston Scientific stock has been rangebound since early February and its relative strength line has been ailing in the past three months. But on Wednesday, shares topped their 50-day moving average, topping a trendline and offering an early entry.
The 107.06 buy point out of a flat base is also still valid as shares never dropped more than 7% below the entry following a late-June breakout — a move that would have triggered a sell rule. Shares are also forming a new flat base with a buy point at 108.94.
Farapulse And Watchman Drive Beat
Watchman sales surged 28% organically to $486 million, beating calls for $460 million.
Farapulse belongs to Boston Scientific's electrophysiology division. Total electrophysiology sales grew almost 94% on an organic and operational basis, hitting $840 million. That crushed expectations for $762.1 million, according to FactSet.
Boston Scientific doesn't break out sales of Farapulse, but did say revenue in the U.S. soared 117% vs. the year-earlier period. Farapulse is now the leading product in Japan's pulsed field ablation market, executives said on the July 23 second-quarter conference call with analysts.
Now, the company is working on a new catheter, called Farapoint, to be used with Farapulse. Analysts expect Farapoint to win Food and Drug Administration approval by the end of the year.
Leerink Partners analyst Mike Kratky sees the potential Farapoint approval "as an important catalyst surrounding incremental growth and continued adoption within persistent (atrial fibrillation) patients with atrial flutter."
Kratky rates Boston Scientific stock an outperform. Following the second-quarter report, he raised his price target on shares to 126 from 118.
"Considering this favorable near-term catalyst path, we believe the accretive gross margin profile of both WATCHMAN and PFA de-risks the 2H25 EPS guide," he said in a report.
More Than 25% Of Total Sales
This year, analysts expect Watchman and electrophysiology products to generate $5.22 billion in sales, accounting for more than a quarter of Boston Scientific's total sales.
The top 10 medical products companies have annual sales ranging from $5.44 billion to $33.54 billion. To put that in perspective, those two Boston Scientific segments — alone — are projected to generate nearly enough this year to rank among the top 10 medical products makers. Boston Scientific, as a whole, ranks fourth.
By 2028, Watchman and electrophysiology sales will become even more important for Boston Scientific, bring in a combined $8.52 billion, accounting for nearly a third of total sales.
Boston Scientific expects sales this year to grow 14% to 15% organically, up from its previous call for 12% to 14% growth. The company also calls for adjusted earnings of $2.95 to $2.99 per share, an increase from the guidance for $2.87 to $2.94 issued in the first-quarter report.
Needham's Matson raised his price target on Boston Scientific stock to 121 from 115. He rates shares a buy.
"Overall, this was another strong quarter for BSX as its key growth drivers continue to deliver," he said.
Boston Scientific Tops Its Peers
Boston Scientific stock has an IBD Digital Composite Rating of 88. This means shares outrank 88% of all stocks in terms of fundamental and technical measures.
Shares have a lower Relative Strength Rating of 68, reflecting poor recent performance. Still, on a year-to-date basis, Boston shares have risen nearly 18%. The broader medical products industry group has fallen more than 9%. The group also has a lower RS Rating of 32.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
