Earth's human population is aging. According to recent research from the World Health Organization, from 2015 to 2050, the proportion of people 60 or older will almost double, from 12% of the total to 22%.
That's a big leap over a relatively short period, and the trend offers a significant opportunity for medical device makers, especially Boston Scientific (BSX 1.48%). Here are three reasons why its stock can quintuple -- at least -- on the back of this shift.
1. A legacy of treating the elderly
Boston Scientific's focus on afflictions that affect older patients is nothing new. Its Watchman line, which debuted in 2015, consists of small balloon-expandable heart inserts that reduce stroke risk in those with a type of atrial fibrillation (a disorder that skews toward the elderly).
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The company is also a leader in neuromodulation, which uses mild electrical signals transmitted through the body's nervous system to alleviate pain. Chronic pain is relatively common in people with, for example, degenerative disorders, again a health problem that disproportionately affects those of advanced age.
Parkinson's disease is another disorder notorious for claiming victims in the older demographic and presents in tremors and difficulties with mobility. Boston Scientific's Vercise Deep Brain Stimulation (DBS) systems first earned U.S. Food and Drug Administration (FDA) approval in 2017 to help alleviate those issues.
2. A recent push into other niches
Building on this solid foundation of legacy products, Boston Scientific is moving sideways into other therapeutic areas crowded with older patients.
One of the most common medical emergencies for such people is stroke, and one of the most prevalent types of stroke is ischemic (in which a blood clot impedes blood flow to the brain). In January, the company agreed to pay around $14.5 billion in cash and stock to acquire Penumbra. This specialized company produces cutting-edge devices for thrombectomy, the blanket term for methods used to remove clots.
Boston Scientific is also covering stroke prevention with the September 2024 acquisition of Silk Road Medical, an innovative peer company that invented a procedure known as transcarotid artery revascularization (TCAR).
3. It's now an unfashionable stock, and a bargain
Boston Scientific became something of a pariah with its fourth-quarter and full-year earnings report published last month. As per its habit, it posted double-digit year-over-year growth in both revenue and profitability for the quarter. The two line items also convincingly beat the consensus analyst estimates. However, management had the temerity to guide for annual 2026 net sales growth of "only" 10.5% to 11.5% over the previous year.
NYSE: BSX
Key Data Points
This is notably lower than the growth in the three years prior, and it was a major factor in a subsequent sell-off that drove the stock down by more than 17%.
This has left the stock temptingly valued. Its forward P/E now stands at slightly more than 22, which yields a five-year PEG ratio of 0.85 (for reference, a figure below 1 suggests a stock is considered undervalued). That's particularly inexpensive given the company's recent, consistent delivery of double-digit growth.
It's also quite a discount, given how well-positioned Boston Scientific is to capitalize on an aging world. Given that, I think it's not only a top pick in the medical devices field but also in the broader healthcare sector.
