Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Boston Scientific's "Challenging" Quarter

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Boston Scientific (NYSE: BSX  ) fixed its paperwork problem with the Food and Drug Administration earlier this month, but the resulting recall took its toll on first-quarter profits nonetheless. The company's president and CEO, Ray Elliott, dubbed this a "challenging" quarter. Yeah, I'd call that an understatement.

The inability to sell some versions of its heart defibrillators for a couple of weeks cost the company $72 million in revenue last quarter. It'll cut into second-quarter revenue as well, because Boston Scientific didn't get an OK from the FDA to start selling the products again until the middle of this month. As a result, the company reduced its revenue guidance by $500 million.

But the long-term effect should have investors truly worried. Will doctors trust the company after its mistake? Sure, this wasn't a quality issue. But if a company can't file the proper paperwork with the FDA, will doctors feel confident implanting its devices in patients? Taking the things out isn't very easy, you know.

All told, Boston Scientific says it lost 8 percentage points of market share to rivals St. Jude Medical (NYSE: STJ  ) and Medtronic (NYSE: MDT  ) last quarter, and it expects to lose another four points in the second quarter. The company expects to pare that 12-point loss in market share down to just five points by year end, but that's just optimism, as far as I can tell.

While the company is wooing back electrophysiologists, what will happen to its other major segment, drug-eluting stents? Sales of the tiny mesh devices were down 9% in the first quarter, and down 12% on a constant currency basis. Sales could slip further if Medtronic, Abbott Labs (NYSE: ABT  ) , and Johnson & Johnson (NYSE: JNJ  ) decide to make a push in the segment while management is distracted.

Might Boston Scientific be a bad-news buy? Sure, the company could turn things around, and shareholders and management could live happily ever after. But, sometimes past performance does indicate future returns. Until management demonstrates a track record of success, I'm staying far away.

Johnson & Johnson is a Motley Fool Income Investor selection. Motley Fool Options has recommended buying calls on Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of and has written puts on Medtronic. The Fool's disclosure policy is a good value, especially considering its free price.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 27, 2010, at 3:36 PM, Superdrol wrote:

    If you pulled up a 5 year graph, Boston Scientific's chart resembles a ski slope downward.

  • Report this Comment On April 27, 2010, at 9:35 PM, weiwentg wrote:

    I consider most of the major medical device makers to have wide moats due to major regulatory barriers to entry. Boston Sci is the only wide-moat stock I would not buy even if I got it cheap - I think this management team has proven that it only knows how to squander opportunities and destroy value.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1165862, ~/Articles/ArticleHandler.aspx, 10/27/2016 1:27:47 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
BSX $22.09 Down -0.35 -1.56%
Boston Scientific CAPS Rating: ***
ABT $39.96 Down -0.23 -0.57%
Abbott Laboratorie… CAPS Rating: *****
JNJ $114.56 Up +0.60 +0.53%
Johnson and Johnso… CAPS Rating: ****
MDT $81.12 Down -1.35 -1.64%
Medtronic CAPS Rating: *****
STJ $78.70 Down -0.31 -0.39%
St. Jude Medical CAPS Rating: **