An options strategy that bets on this medical device stock catching up to the rest of the market

Boston Scientific (BSX) is highly favored by analysts, with 36 buys and one hold, following robust Q2 performance that saw net sales climb 22.8% year-over-year to $5.06 billion and adjusted EPS of $0.75, exceeding expectations. This growth, fueled by a 29% surge in cardiovascular revenues and strategic acquisitions, prompted the company to raise its full-year 2025 guidance to 14-15% organic sales growth and adjusted EPS of $2.95-$2.99. Despite a recent ~10% stock pullback, BSX trades at a modest premium to the S&P 500 while delivering double its growth rate, underscoring its strong fundamentals and continued expansion in the medical device market.

Analysis

Thirty-six buys, one hold and no sells: Medical device maker Boston Scientific is in pretty rarified air as far as Wall Street's sell-side analysts are concerned. Why is that? Much of the investment world's focus has rightly been directed at the AI build-out. It is, after all, a compelling growth story. However, there are other companies that have been growing rapidly, and for those seeking opportunities outside the AI sector, Boston Scientific (NYSE: BSX) may be worth considering. The company's strong presence in cardiology, endoscopy, and neuromodulation has contributed to impressive top and bottom-line growth. The second quarter this year continued the steady five-year trend of sales growth, with net sales reaching $5.06 billion, representing a 22.8% year-over-year increase. Adjusted earnings per share (EPS) of 75 cents exceeded analyst expectations by 2.74%. This was largely due to a 29% surge in cardiovascular revenues from products like the WATCHMAN left atrial appendage closure device and the FARAPULSE pulsed field ablation system. Consequently, Boston Scientific raised its full-year 2025 guidance, now projecting 14%-15% organic sales growth and adjusted EPS of $2.95 to $2.99 (Street consensus is 2.98), and the average of analysts' estimates for FY 2026 is 3.41/share, which would represent 14.3% YoY adjusted EPS growth. As of Friday's $97.32 closing price, BSX is trading only a turn or so higher than the S & P while growing at double the pace. Strategic acquisitions are further enhancing this growth trajectory. The $88 million deal for Elutia's BioEnvelope business, effective on Oct. 1, is expected to enhance protection for implantable devices. Earlier integrations of SoniVie's TIVUS Intravascular Ultrasound System and Bolt Medical's coronary lithotripsy technology have expanded capabilities in renal denervation and vascular intervention. With the pending acquisition of Cortex, expected in the first half of 2025, BSX is also set to advance neurovascular treatments. The company reports earnings on Oct. 22 (Street estimates are for approximately 71 cents per share); however, this is not a stock that historically moves significantly on earnings. The one-day average earnings-related move is less than 3%, although options premia are slightly elevated. Arguably, the biggest knock on the stock is technical. While the market is trading at all-time highs, BSX has fallen almost 10% since early September. Most technical indicators remain bullish, but not all. Consequently, a modestly bullish strategy may represent a slightly more conservative bullish play than buying the stock (or upside calls) outright. As a stock substitute, one might consider the following calendar call spread risk reversal. Selling a nearer-dated strangle against a longer-dated call purchase with a modest initial outlay. DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer. Boston Scientific (BSX) exhibits a robust fundamental profile, strongly endorsed by Wall Street with 36 'buy' ratings against a single 'hold'. The company's Q2 results demonstrated significant momentum, with net sales growing 22.8% year-over-year to $5.06 billion, driven by a 29% surge in its cardiovascular division. Adjusted EPS of $0.75 surpassed analyst expectations, leading management to raise full-year 2025 guidance to 14-15% organic sales growth and an adjusted EPS range of $2.95-$2.99. This growth trajectory is further supported by a strategic M&A strategy, including the acquisition of Elutia's BioEnvelope business and the pending purchase of Cortex, which enhances its product portfolio in key areas like implantable device protection and neurovascular treatments. Despite these strengths and a valuation that is only marginally higher than the S&P 500 while growing at twice the pace, the stock has experienced recent technical weakness, falling nearly 10% since early September. This divergence between strong underlying business performance and negative short-term price action represents the primary conflict for investors to resolve.

Key Decisions for Investors

• Given the company's strong fundamentals and raised guidance, the recent 10% stock price pullback could be considered a buying opportunity for investors with a long-term horizon.
• Investors should monitor the integration and performance of recent acquisitions, such as Elutia and the pending Cortex deal, as successful execution is a key component of the long-term growth thesis.
• While fundamentals are compelling, the noted technical weakness warrants caution; it may be prudent to await signs of price stabilization or a technical trend reversal before initiating large new positions.
• Considering the stock's historical low volatility around earnings, the upcoming October 22 report is more likely to be a confirmation of trends rather than a major price catalyst, shifting focus to management's forward commentary.