Boston Scientific Corp (BSX) – I entered BSX stock near its 52 week low, and since then the stock has moved past $16. Positive 3rd earnings moved the stock up a couple dollars, but I’m still worried that lagging core sales of their top selling medical device.
This purchase is clearly short term because Boston Scientifics� problems include integrating the $27 billion Guidant purchases and falling Cardio device sales.
BSX Shares On The Cheap
I like to buy cheap damaged stocks at a premium, but BSX is beginning to look like a damaged company. Recalls from Guidant products hurt revenue and income, cardio rhythm and Taxus drug coated sales fell 7% and 5% respectively, and the FDA is warning Boston Scientific about its sub-par quality control system.
Boston Scientific Fundamentals
Boston Scientifics’ core businesses and reputation has taken a beating, but let’s also take a look at Boston Scientific Corp’s balance sheet before we make final conclusions.
Balance Sheet
- Boston Scientific Corporation holds $1.5 billion in cash which can be used towards debt reduction, and stock repurchases. If BSX makes any acquisitions in the fourth quarter, beware because the Guidant purchase still needs a tune up.
- The firm accumulated $7 billion in long term debt from the Guidant acquisition and other related expenses.
- Working Capital (the amount of liquid assets) is around $2 billion, but I only hold companies whose working capital equals long term debt. If Boston Scientific cannot profitize the Guidant acquisition, creditors will come knocking on their door, fast.
Bottom Line: BSX looks like a short term play, and that’s exactly how I’m going to hold this stock. Johnson & Johnson dominates the medical device market, so look at JNJ for a long term medical devices stock play.
Do you own shares of BSX? Share your opinion below.
