Evidence that sales of implantable heart devices and drug-coated stents are recovering from long slumps lifted shares of Boston Scientific Corp. Friday, and the company's shares edged higher.
A pair of analysts upgraded Boston Scientific stock based on the company's fourth-quarter results on Wednesday. In afternoon trading, the stock added 14 cents to $8.90, building on a 3.1 percent gain on Thursday.
For the quarter, sales of implantable cardioverter defibrillators rose 8 percent. Revenue from drug-coated stents fell 2 percent, but Wachovia analyst Larry Biegelsen said the worldwide stent market grew in the fourth quarter.
Implantable cardioverter defibrillators, or ICDs, are surgically implanted devices that shock the heart to restore a regular rhythm. Stents are wire mesh tubes that hold arteries open following surgery, improving blood flow after the arteries have been cleared of plaque. Some stents are coated with drugs to prevent scar tissue from clogging the vessels again.
Biegelsen wrote that both markets are improving and Boston Scientific is taking market share, which puts the company "back on offense." He raised his rating on the stock to "Outperform" from "Market Perform."
Worldwide sales of implantable heart devices grew about 6 percent in 2008, Biegelsen said, and they should keep rising at that pace in 2009 and 2010. That comes after flat results in 2006 and 2 percent growth in 2007. He thinks stent sales will rise 1 percent in 2009.
Safety concerns have hurt sales of both products: several prominent heart device makers have issued product recalls in the last few years, while studies in 2006 links drug coated stents to an increased risk of blood clots.
Sales of drug coated stents dropped 23 percent in 2007, Biegelsen wrote.
Thomas Weisel Partners analyst Philip Legendy upgraded shares of Natick, Mass.-based Boston Scientific two notches, to "Overweight" from "Underweight".
Legendy believes the improved ICD sales should continue because Boston Scientific has launched two new small ICDs, Cognis and Teligen. He also expects better stent sales. He said the company is also hiring new, experienced sales staff, which should support the business.
He added that sales outside the U.S. should pick up. Boston Scientific lost its Japanese distributor in April 2008, and starting in April, comparisons to year-ago results will get easier.