Boston Scientific Gains Strength as Omicron Recedes; No Change to Our Fair Value Estimate

Boston Scientific saw strong first-quarter results that generally fell in line with our expectations, and we’re standing pat on our fair value estimate. Like other medical device makers, Boston felt the pinch of omicron depressing procedure volume in January, followed by increasing improvement as the quarter unfolded, which translated into quarterly organic revenue growth of 10% versus the prior-year period. Similarly, Boston has been under pressure from rising transportation and component costs, which we expect should damp margin expansion this year. However, underlying demand remains strong, and some delayed procedures should return in 2022, though hospital staffing remains a constraint on growth in procedure volume through the near term. Importantly, we remain confident in Boston’s narrow moat, which is supported by intangible assets and its product pipeline.