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Needham upgrades Boston Scientific to buy, says company can fend off competition

Boston Scientific has strong prospects across the board, including in an area where a rival is trying to take market share, according to Needham. Analyst Mike Matson upgraded Boston Scientific to buy from hold, saying in a note to clients that a medical device produced by the company should remain a strong seller despite new competition from Abbott Laboratories . The device, which is called watchman, can be used to reduce stroke risk in patients with irregular heartbeats. “BSX is now reporting WATCHMAN sales on a quarterly basis. While management has stated that this is due to a reorganization of its reporting segments rather than a sign of bullishness, we find it hard to believe that they would have chosen to do this if they were concerned about the impact of Abbott’s (ABT – Not Rated) Amulet launch,” Matson wrote. And even if Abbott product gains market share, Boston Scientific should be able to offset that with strength elsewhere, according to Needham. “We performed a sensitivity analysis of BSX’s overall revenue growth to WATCHMAN’s growth, and we now believe that 1) BSX could sustain high single digit organic growth even assuming a moderate slowdown in WATCHMAN growth; and 2) BSX should be able to at least partially offset slower WATCHMAN growth with upside from other products,” Matson wrote. Additionally, Needham said that Boston Scientific could be a takeover target if merger and acquisition activity in health care ramps up, which would likely provide upside for shareholders. Needham set a price target of $48 per share for Boston Scientific. That is nearly 20% above where the stock closed Thursday. — CNBC’s Michael Bloom contributed to this report.

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