Medical device manufacturer Boston Scientific Corp. (NYSE: BSX) is seemingly off to a tough start to the year, as shares have plunged by 26% year-to-date (YTD) and by almost a third in the last year. But investors looking more closely at the healthcare company's fundamentals may find that it has actually posted some notably strong results recently, including adjusted earnings per share (EPS) of 80 cents for the last quarter, which was 2 cents above consensus estimates.
Indeed, a detailed look at Boston Scientific's earnings suggests that the company is doing quite well—its electrophysiology (EP) segment, and Watchman products in particular, have grown rapidly and seem on track to continue delivering going forward. What's more, the company is expected to release results from its Champion-AF trial by the end of March, which could have a major impact on the product's addressable client base. Investors may therefore be tempted to buy the dip in BSX stock, though it's also important to keep in mind why shares have fallen and what other risks may remain.
Is the Boston Scientific Dip Justified?
Shares of BSX plunged following its earnings release in February, despite revenue climbing about 16% year over year (YOY) and adjusted EPS beating expectations. Free cash flow also improved considerably, climbing by 38% YOY to about $3.7 billion.
So what was behind the selloff following earnings? It may be that investors were disappointed by the company's 2026 organic revenue guidance, which forecast YOY growth of 10% to 11%. This would be quite a bit slower than 2025's full-year revenue growth of about 20%.
Part of this is due to the near-term impact of the company's discontinuation of certain products in its Axios catheters and other lines at the start of the year.
Management expects that this will slow down early-2026 growth by about 150 basis points.
However, much of Boston Scientific's business remains not only intact, but growing and efficient. The company has guided another year of growing free cash flow, with $4.2 billion anticipated in 2026, as well as a boost to operating margin expansion and other metrics.
The Champion Trial Could Be a Catalyst for Reversal
What might help to reverse Boston Scientific's downward slide in share price is the results of its Champion trial, which aims to measure the company's Watchman stroke reduction implant against oral anticoagulation treatments. Investors should watch these results closely, as the addressable patient pool for Watchman could quadruple to 20 million if the trial shows promising outcomes.
The scope of that impact, should results be positive, is potentially significant for Boston Scientific over multiple years, as it would then be able to catalyze sales growth throughout the world by identifying millions of new potential patients.
There is another potential factor that could drive Boston Scientific's growth: the neurovascular device company Penumbra (NYSE: PEN), which Boston Scientific has plans to acquire. Penumbra's products would allow Boston Scientific an entry point to the mechanical thrombectomy market, an area in which it currently does not have any presence. The $14.5-billion acquisition is backed in part by a $6-billion term loan that the company secured in late February. Although this puts pressure on its finances, the surging free cash flow and overall fundamental strengths associated with Boston Scientific's pre-existing business lines may mitigate any near-term concerns investors have.
Risks and Analyst Perspectives Are Worth Keeping in Mind
Of course, a major risk to Boston Scientific's growth trajectory would be a negative result to its Champion trial. Not only would this essentially eliminate the idea that Watchman's sales growth would continue to accelerate, but it also would have a severe impact on the company's overall revenue growth plans, perhaps making its guidance of 10% to 11% sales growth for 2026 less tenable.
On the other hand, investors might want to note how optimistic Wall Street analysts are about Boston Scientific. Out of 25 ratings, 23 are Buys, and just two are Holds. This includes a number of Buy ratings reissued by institutions, including Stifel Nicolaus, Jefferies, and Truist Financial, all in March. Notably, some of these analysts have tempered their price targets for BSX shares, even while retaining Buy ratings.
Still, Wall Street expects that there is ample upside potential, as the consensus price target of $106.27 is over 50% above where BSX currently trades.
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The article "Why Boston Scientific's Big Dip Could Be a Bigger Opportunity" first appeared on MarketBeat.
