Citi maintains Buy on Boston Scientific, keeps $125 target

Citi analysts reiterated a Buy rating with a $125 price target for Boston Scientific (BSX) despite the company's decision to discontinue its Acurate neo2 and Acurate Prime TAVR valves due to rising regulatory demands. While the discontinuation will affect gross margins, BSX reaffirmed its 2025 sales and EPS guidance, supported by 10.9% OUS TAVR revenue growth in 2024 and overall revenue growth of 19.36%; analysts suggest Edwards Lifesciences (EW) and Medtronic (MDT) could benefit from BSX's exit, and the firm maintains a positive outlook on BSX, reaffirming its status as a Top Pick.

Analysis

Boston Scientific Corporation (BSX) is discontinuing global sales of its Acurate neo2 and Acurate Prime TAVR valves due to increased clinical and regulatory demands, a development analysts at Citi characterize as strategic resource management. Despite this product withdrawal, which is expected to affect gross margins, BSX has reaffirmed its second quarter and full-year 2025 sales and earnings per share (EPS) guidance. This confidence is underpinned by a 19.36% overall revenue growth in the last twelve months, and prior OUS TAVR revenue growth of 10.9% in 2024 to $214 million, although OUS sales later saw declines following unfavorable clinical data. The company's strong underlying performance is further evidenced by 21 analysts revising earnings upward, robust first-quarter 2025 results prompting an increased full-year sales forecast of 15% to 17% growth and an EPS range of $2.87 to $2.94. Moody’s has upgraded BSX’s credit rating to A3, citing strong operating performance. Analyst sentiment remains positive, with Citi reiterating a Buy rating and $125 price target, Needham reaffirming a Buy with a $115 target (citing outperformance expectations for FARAPULSE and WATCHMAN), and Erste Group initiating coverage with a Buy. InvestingPro data indicates a "GREAT" financial health score for BSX, highlighting strong cash flows and moderate debt. This strategic shift by Boston Scientific may create opportunities for competitors such as Edwards Lifesciences and Medtronic in the TAVR market.

Key Decisions for Investors

• Evaluate Boston Scientific's decision to discontinue its Acurate TAVR valves as a strategic reallocation of resources, noting the company's reaffirmed 2025 guidance and strong analyst backing despite anticipated gross margin impacts.
• Monitor the performance trajectory of key growth drivers such as FARAPULSE and WATCHMAN, which are pivotal in offsetting the TAVR discontinuation, and assess any market share dynamics benefiting competitors like Edwards Lifesciences and Medtronic.
• Consider the company's robust financial position, evidenced by 19.36% LTM revenue growth, an upgraded 2025 forecast (15-17% sales growth, $2.87-$2.94 EPS), positive earnings revisions, and an improved A3 credit rating, when assessing the investment outlook.