Boston Scientific Beats Street Expectations, Buys Back Shares, and Eyes China Expansion
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30 percent of the market for Cypher, Elliott noted. The J&J product is expected to bring in about $400 million in sales this year. Cypher was once a $2.6-billion-a-year blockbuster, but it faltered as competition and safety concerns mounted. Elliott wouldn’t make any specific market share predictions, except to say “We believe we can capture the lion’s share of that business.”
Boston Scientific boosted its full-year sales and earnings forecast. It now expects sales of at least $7.675 billion and earnings per share, excluding certain expenses, of at least 58 cents. (In 2010, the company earned 69 cents a share, excluding certain costs, on sales of $7.8 billion.)
Investors seemed pleasantly surprised by the company’s performance in what has otherwise been a difficult year. On May 11, the company’s shares fell 10 percent on news that Elliott would resign at year end, just two years after he joined the company to engineer a turnaround. Boston Scientific has yet to name a replacement.
RBC Capital Markets analyst Glenn Novarro asked a question that was likely on everyone’s minds today: Is Elliott leaving because there’s something amiss with the turnaround? Or is it going so well that he felt confident others could carry on without him? “There is no shoe to drop,” Elliott responded. “I’m doing what I came here to do.” He expressed optimism that the company could continue to execute its turnaround plan after his departure. “It’s not my plan—it’s their plan.”
During his prepared comments during the call, Elliott focused largely on new contracts and pipeline advances the company chalked up during the quarter. At one point, he boldly stated, “Innovation is alive and well at Boston Scientific.”
Investors may take a while to come around to that idea, but they’re clearly hoping this quarter signals the start of the turnabout in Boston Scientific’s fortunes: Shares were up 10 percent in morning trading to $7.39.