When Boston Scientific Corp. (NYSE: BSX) reported second-quarter results Wednesday, revenues were up 10% overall, with medical and surgical product sales up 29%. Shares rose nearly 3% on Thursday but stalled out on Friday. Over the past year, the shares are up more than 40%.

Unlike other big medical device companies, Boston Scientific has made few acquisitions, and only one in the past decade has been valued at more than $1 billion. Instead, CEO Mike Mahoney, told Bloomberg, “We think category leadership is the best play, rather than just being as wide as possible.”

The company plans to generate $6 billion in free cash flow over the next three years, leading a Bloomberg Intelligence analyst to say, “If they generate the $6 billion they expect over the next three years, they clearly have some capacity to work with. I think investors will expect them to be more active in M&A or share repurchases.”

For now, though, analysts are impressed enough. Said Credit Suisse:

We’re also raising our 2017-20 sales & EPS estimates ~2-4% primarily on higher Cardiovascular and share buyback estimates (we now forecast ~$2.0B in cumulative share repurchases 2017-19 vs. $1.7B previously given BSX’s commentary on expected uses of $6B in [free cash flow] on yesterday’s conference call) and raising our [distributable cash flow]-based price target to $26 from $25 on our higher estimates. … With BSX we see continued margin expansion as sustaining double-digit EPS growth with enough favorable near-term sales drivers … to maintain organic sales growth of ~6+% through 2018.

Merrill Lynch concurred:

Our confidence in BSX’s pipeline (LAA, Lotus) has increased and we believe BSX can grow revenue in the 5-6% range going forward. Our confidence in the top line and our ongoing margin diligence also suggests the BSX operating margin story is achievable (as has been well documented BSX’s margins are 500-1000 basis points below peers), which suggests BSX can be a solid 13-15% EPS grower for the next several years. We think a positive risk reward exists as the margin story plays out.

Other analyst calls we saw included:

• Barclays raised its price target from $25 to $27.
• Benchmark boosted its price target to $31 with a Buy rating.
• BMO lifted its price target to $27 and rates the stock Outperform.
• Jefferies raised its price target from $21 to $24.
• Oppenheimer raised its price target to $26 from $23.
• Raymond James upped its price target to from $25 $28 and has the stock as a Strong Buy.
• Wedbush raised its price target from $23 to $25 with a Neutral rating

Shares closed at $24.28 on Friday, down fractionally for the day. The stock’s 52-week range is $14.18 to $24.79, and the high was posted Thursday. The consensus 12-month price target is $26.

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