Shares of leading cardiovascular and medsurg (medical-surgical) technologies provider Boston Scientific (BSX 17.50%) are down 16% as of noon ET on Wednesday, following its fourth-quarter earnings report. Boston Scientific grew sales and adjusted earnings per share (EPS) by 16% and 14%, surpassing Wall Street's expectations. However, the company came up ever-so-slightly short of analysts' hopes for Q1 and 2026 guidance, sending the stock down today. After the stock doubled between 2023 and 2025, the market seemed to have Boston Scientific priced to deliver exceptional guidance -- and while its Q4 earnings looked great (to me, at least), its guidance wasn't "perfect" in the market's eyes.
NYSE: BSX
Key Data Points
Buy the dip on this top-tier compounder?
I believe the market's reaction to Boston Scientific's earnings is a bit short-sighted. The company:
- delivered 18% sales growth in its core cardiovascular segment
- grew revenue by 12% in its medsurg unit
- delivered 12% sales growth or higher in every geography it covers
- continued building out its broad pipeline of technologies in both segments
- announced its intent to acquire Penumbra, potentially reinforcing its vascular tech solutions
- projected for 11.25% sales growth in 2026
- guided for $4.2 billion in free cash flow (FCF) in 2026, compared to $3.7 billion this year
Image source: Getty Images.
Now trading at 28 times forward FCF, Boston Scientific isn't outrageously valued, given that it has grown sales by double digits for 12 consecutive quarters. Most importantly, the company remains an innovation (and investment) machine, which should help extend this track record of growth. Boston Scientific has made roughly 40 acquisitions over the last decade, has about 45 active investments in its venture capital portfolio, and has over 65 ongoing trials, suggesting that its growth story is far from over. While I understand the market's reaction to a degree, given the stock's somewhat lofty valuation -- "missing" EPS guidance at the midpoint for Q1 and 2026 by one penny shouldn't be a big deal for investors looking a decade ahead. With Boston Scientific delivering annualized total returns of 18% over the last decade, I view the company more as a buy-the-dip opportunity.
