The coming year? Try two-thirds of a decade. In 2004, the company made $1.24 per share. This year, the company will be lucky to make half that; adjusted earnings guidance calls for $0.50 to $0.60 per share. Since its heyday, Boston Scientific's shares have fallen some 85%.
So much for the high hopes that Elliott could turn things around quickly.
Not that it's Elliott's fault. Boston Scientific operates in a tough business segment filled with competition. At its height, Boston Scientific was in a two-company race with Johnson & Johnson
The acquisition of Guidant helped the company diversify into defibrillator and pacemakers, but it came at a high cost, and the return on the investment has been less than stellar.
The weak economy hasn't helped. Part of the less-than-stellar guidance stemmed from doctors performing fewer procedures. Until the jobs come back and people get their health insurance back, patients will put off medical care that might otherwise ring up sales for Boston Scientific.
Normally, I'd say that's a buying opportunity. As long as you're willing to think long-term, you can take advantage of the near-term pessimism to make a killing. Patients won't be able to wait forever.
But Boston Scientific hasn't shown that it's able to bounce back. Investors were thinking the same thing in 2006, after it was halved from above $40 to $20 per share, only to see it drop to under $10. I'd suggest throwing Boston Scientific on your show-me list and wait for an actual turnaround before investing.
Johnson & Johnson is a Motley Fool Inside Value pick and a Motley Fool Income Investor recommendation. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Johnson & Johnson, and Medtronic. Motley Fool Alpha owns shares of Abbott Laboratories and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.