On Oct 1, we issued an updated research report on Boston Scientific Corporation BSX. The company’s recent acquisitions have added various new products (though many are under development) with immense potential to its portfolio. The stock carries a Zacks Rank #2 (Buy).

This leading manufacturer of medical devices and products used in various interventional medical specialties worldwide has been outperforming its industry over the past three months. The stock has rallied 17.6% compared with the industry’s 13.5% growth.

Boston Scientific’s strategy to expand its existing portfolio through inorganic means has been progressing well. This in turn, should help boost the top line in the long term. During the first quarter of 2018, the company announced four compelling tuck-in acquisitions, namely Claret, Cryterion, nVision and Securus. All these buyouts target high-growth markets, enhance the company’s category leadership strategy, leverage its existing capabilities and further, drive the company’s short-term and long-term growth profile.

Prior to this, the company announced consolidations of NxThera and nVision in Urology and Pelvic Health, EmCision in Endoscopy, Securus in EP (Electrophysiology) and Millipede in Structural Heart. Per Boston Scientific, these acquisitions will open up opportunities worth above $16 billion in the new markets by 2021.

We are also upbeat about Boston Scientific’s structural heart programs, rapidly building momentum on the back of a strong performance by WATCHMAN left atrial appendage closure device and ACURATE TAVR valve. This apart, the company’s major investment in inorganic expansion is also achieving fruitful results.

In this regard, the company is quite positive about its Claret Medical integration plan, which will add Claret’s Sentinel to its structural heart portfolio.

Boston Scientific is gradually strengthening its presence in the emerging markets across countries like Brazil, Russia, India and China (BRIC). In second-quarter 2018, business from the emerging markets registered impressive growth. led by a solid performance in China.

However, declining worldwide pacemaker sales in the recent past persisted to weigh on the company’s Cardiac Rhythm Management (CRM) results. In the second quarter, the company witnessed a significantly weak pacemaker performance due to certain product gaps between CRT-D pacing and MRI line. Although the company has of late adopted several measures to reverse this trend (including the launch of RESONATE platform), the near-term outlook is bleak.

Further, we are concerned about the company’s recall of one of its prime offerings — the Lotus range of heart devices.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Intuitive Surgical ISRG, Amedisys, Inc. AMED and Masimo Corporation MASI.

Intuitive Surgical’s expected long-term earnings growth rate is 14.7%. The stock currently carries a Zacks Rank #2 (Buy).

Amedisys’ expected long-term earnings growth rate is 19.4%. The stock holds a Zacks Rank of 2 at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term earnings growth rate is projected at 14.8%. The stock is currently a Zacks #2 Ranked player.

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