It's commonplace for companies in the healthcare space to buy their way into new markets and product categories. Boston Scientific (BSX 1.70%), a top healthcare stock and medical device company, recently announced it was investing $1.5 billion in MiRus LLC for an approximate 34% stake in the business.
The investment gives Boston Scientific a foothold in the transcatheter aortic valve replacement (TAVR) market, which Grand View Research estimates could grow from $4.5 billion in 2024 to $12.2 billion by 2033. The announcement happened a week ago, and thus far, Wall Street isn't showing any loss of love for the stock. Of 36 analysts polled by CNN Business, 92% have rated Boston Scientific a buy.
Here's more about Boston Scientific's investment, and what it could mean for investors.
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The fine print reveals that an even bigger transaction could be lurking
Transcatheter aortic valve replacement is a treatment for aortic valves in the human heart that are too narrow to open properly. MiRus is developing the proprietary Siegel TAVR system; it's the first nickel-free, balloon-expandable TAVR valve intended to restore function and normal blood flow to severely narrowed aortic valves.
Boston Scientific will immediately own about a third of the company with this initial investment, but the deal also lays the groundwork for a potential 100% acquisition. If the MiRus TAVR system meets the appropriate milestones, Boston Scientific has the option to pay up to an additional $3 billion to acquire it.
It's a clever deal because it paves the way for the acquisition without risking the full amount should the system ultimately fail. The only real downside is that it won't contribute anything to Boston Scientific's earnings in 2026, so there's no immediate return on that capital.
NYSE: BSX
Key Data Points
Wall Street could be following the insiders
Sure, 92% of analysts on CNN Business rate Boston Scientific as a buy, but that alone shouldn't be a reason for an individual investor to buy a stock. It does help the case when insiders, key employees at the company, begin scooping up shares. Regulatory filings on May 21 revealed that three directors at the company recently purchased shares worth a total of over half a million dollars.
Additionally, Boston Scientific recently announced a $2 billion accelerated buyback program, in which it purchases its own shares on the open market ahead of its previously announced schedule. It's a pretty loud signal that management views the stock's valuation favorably.
Wall Street analysts estimate that Boston Scientific will grow earnings by over 16% annually over the next three to five years. The stock is currently a bargain, trading at just 17 times 2026 earnings estimates, assuming earnings grow at or near that pace.
Boston Scientific had already laid the groundwork for growth and was a compelling buy last week. Now, the future could be even brighter, with a groundbreaking new product potentially opening a massive new market for the company.
