Boston Scientific's New Stent May Assist in Turnaround (BSX, ABT, JNJ, MDT, STJ)

Boston Scientific Corporation (NYSE: BSX) has been a long and painful investment for thousands of shareholders who have held shares in hopes that this turnaround stock can eventually turn around.  News yesterday out of the company over its U.S. and European launches of the Neuroform EZ™ Stent System may be one catalyst to watch in aiding in this turnaround.  The launch is to take place immediately, but the problem is that it is not likely to add significantly until late-2010 or later.

The company competes in a very crowded field against traditional stents and drug-eluting stents from larger competitors such as Abbott Laboratories (NYSE: ABT), Johnson & Johnson (NYSE: JNJ), Medtronic Inc. (NYSE: MDT), and St. Jude Medical Inc. (NYSE: STJ).  At least the domain name Stent.com is owned by Boston Scientific, so it is going to have top search billing for a while if it keeps its online advertising up.  Earnings are now already behind most of these companies.

The Neuroform EZ™ Stent System its Boston Scientific’s fourth-generation intracranial aneurysm stent system that was designed for use in conjunction with endovascular coiling to treat wide-necked aneurysms.

One of the largest problems facing Boston Scientific is the sins of yesteryear with product recalls and manufacturing issues.  Its still relatively new CEO Ray Elliott has only been in a year but he has been unable to improve the company’s prospects.  Shares jumped to almost $10.00 a year ago upon the announcement of his replacement over Jim Tobin.  Shares sit under $6.00 today.

Tobin’s leadership was far worse.  During that painful Guidant acquisition, valued at nearly $25 billion at the time, Boston Scientific’s shares were north of $25.00.  Before it got involved in the deal, shares were worth more than $30.00 and even briefly more than $40.00.

Boston Scientific may have at least some help from the new stents in its never-ending turnaround.  The larger issue to consider is that Boston Scientific is a series of many moving parts and its balance sheet remains leveraged after the Guidant deal failed to deliver on the gains that had been hoped for.  There is also the issue of taking back and growing market share in many of its areas of operations.

No single unit will likely be able to make its turnaround a success.  This is a situation that is going to require many such new products, and it will require fewer and fewer manufacturing and product woes.

JON C. OGG