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Stent Wars 2: The Market-Share Menace

Stephen D. Simpson, CFA
May 25, 2005

The battle for drug-coated stent market share between Johnson & Johnson (NYSE: JNJ  ) and Boston Scientific (NYSE: BSX  ) may not be as exciting as watching Obi-Wan Kenobi and Anakin Skywalker fight, but the haircuts are much better, and the outcome actually matters.

Early Wednesday morning, Boston Scientific sent a tremor through the market with its updated earnings guidance. In contrast to an earlier forecast of $6.4 to $6.7 billion in revenue and $2.00 to $2.20 in EPS, Boston Scientific now predicts revenue of $6.35 to $6.57 billion and earnings of $1.85 to $2.00 per share.

Not surprisingly, the company's Taxus drug-eluting stent is the focal point. The company now expects worldwide Taxus sales of $2.62 billion to $2.76 billion -- down from February guidance that ranged from $2.7 billion to $3 billion.

And there's the rub for Boston Scientific, its partner AngiotechPharmaceuticals (Nasdaq: ANPI  ) , and the partnership of Johnson & Johnson and SurModics (Nasdaq: