Two Medical Giants Reported Similar Growth. Why Investors Hammered One.

Boston Scientific (BSX) stock popped Thursday on its “solid” third-quarter results, while shares of rival Edwards Lifesciences (EW) tumbled after its earnings came in line with forecasts.

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Both companies make devices that can replace faulty heart valves without resorting to open-heart surgery. During the September quarter, Boston tacked on 10.2% organic sales growth, besting its own expectations for 7% to 9%, while Edwards’ sales grew 11% organically.

But only BSX stock rose Thursday. In morning trades on today’s stock market, shares of Boston Scientific edged 0.7% higher, near 50.30. That peeled back from an earlier gain of 3.8%. EW stock, on the other hand, plunged more than 8% near 62.65.

Earnings Beat Lifts BSX Stock

Overall, Boston Scientific earned an adjusted 50 cents per share on $3.53 billion in sales. On a strict, as-reported basis, sales climbed 11.2% and beat the FactSet-polled forecast for sales to come in at $3.48 billion. Earnings grew more than 16%. Analysts called for just 48 cents.

Organically, medical-surgical sales grew 9.4% to $1.34 billion, with an even stronger 10.6% rate from the cardiovascular business. Cardiovascular sales were $2.19 billion.

Evercore ISI analyst Vijay Kumar kept his outperform rating and 60 price target on BSX stock.

Boston offered a conservative view for the fourth quarter, he said. The company expects adjusted earnings of 49 cents to 52 cents per share. At the midpoint that’s slightly below forecasts for 52 cents a share, according to FactSet. The company also expects sales to grow 8% to 10% on an organic basis.

The company raised its guidance for the year and now expects sales to grow to 11% on a strict, as-reported basis and organically. Boston Scientific also expects to earn an adjusted $1.99 to $2.02 per share.

BSX stock analysts forecast $2 earnings per share and nearly $14.1 billion in sales, up 11.1%.

EW Stock Dives On Guidance ‘Noise’

Edwards Lifesciences, however, reported third-quarter earnings and sales that merely came in line with Wall Street’s expectations. The medtech company earned 59 cents per share, excluding certain items, on $1.48 billion in sales. Earnings fell by two pennies year over year. Sales grew 12% on an as-reported basis.

Organic sales growth was in line with year-to-date trends, Evercore’s Kumar said in a separate report.

But he says EW stock is experiencing the blowback of “noise” around its guidance. The company expects full-year sales to grow 10% to 13% in constant currency. Edwards also expects sales of its transcatheter aortic heart-valve replacements to increase by the same percentage. TAVR is a method of replacing a diseased heart valve by threading a replacement up through an artery in the leg.

“The updated guide implies annual revenues of $5.92 billion to $6 billion vs. prior (guidance for) $5.9 billion to $6.1 billion,” Kumar said. “Keep in mind all of this impact is being felt in the fourth quarter, which implies the fourth-quarter guide excluding foreign exchange rate change was $1.49 billion to $1.57 billion, with the midpoint being in line with the Street.”

This actually implies a step-up in TAVR growth, he said. EW stock investors are closely watching this business. Boston Scientific is expected to launch its platform in the U.S. next year.

“As a base case, we continue to see Edwards Lifesciences’ TAVR business growing at a double-digit clip in fiscal year 2024,” he said.

Kumar kept his outperform rating on EW stock, but trimmed his price target by 2 to 80.

Edwards Lifesciences shares fell to their lowest point since April 2020. But BSX stock is closing in on a buy point at 55.38 out of a flat base, according to MarketSmith.com.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.

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