After Multiyear Turnaround, Is Boston Scientific Finally (and Really) Back?

Boston Scientific Corp. (NYSE: BSX) reported third-quarter results of $0.20 in earnings per share and $1.85 billion in revenue. That was against Thomson Reuters consensus estimates of $0.20 in earnings per share and $1.82 billion in revenue. Its third quarter of the previous year had earnings of $0.10 per share and revenue of $1.74 billion.

The company gave revenue guidance for the fourth quarter of $1.88 billion to $1.93 billion, against a consensus estimate of $1.92 billion. The outlook for the full year calls for $0.81 to $0.83 in earnings per share and $7.37 billion to $7.42 billion in revenue, compared to consensus estimates of $0.82 in earnings per share and $7.39 billion in revenue.

Shares of Boston Scientific were trading up about 3.5% at $12.45 in the first two hours of trading Wednesday. From the beginning of the calendar year to Tuesday’s close, the S&P 500 has risen roughly 6%, compared to Boston Scientific, which was only up $0.01 per share.

24/7 Wall St. would ask if this turnaround in earnings and outlook is really convincing investors that Boston Scientific is back. We asked a year ago whether it was time to sell on the company’s turnaround. Looking at the price from 52-weeks ago to now, the current price (excluding extremes) has barely changed to $12.03 from $12.22. The stock has a 52-week trading range of $11.10 to $14.08.

One thing in the Boston Scientific turnaround that is rather different this time around is the valuations. The stock is valued at just over 15 times expected 2014 earnings and at just under 14 times expected 2015 earnings. When we questioned whether it was time to sell last year, the valuation was closer to 20 times expected 2014 earnings at the time (one-year out), and that was after shares had more than doubled at the time.

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The last time Boston Scientific stock was trading above the $12 mark before September 2013, was in September 2008. The stock has a consensus analyst price target of $14.48 and the company has a market cap of $16 billion.

Boston Scientific’s acquisition of Guidant was supposed to be a game-changer. It was, but not in the way the company was hoping for. This stock’s peak in the turnaround price was back in January, and the chart prior to this latest pop up was a steady series of lower highs and a series of lower lows. Some turnarounds are simply very hard to make good on.