TLDR
- Fourth quarter adjusted earnings of 80 cents per share beat analyst forecasts of 78 cents
- Revenue totaled $5.29 billion with 12.7% organic growth, exceeding Wall Street targets
- First quarter outlook disappointed with 8.5% to 10% projected growth versus 9.8% consensus
- Electrophysiology segment sales of $890 million fell short of $933 million estimate
- Stock declined 8.4% in premarket trading following the earnings release
Boston Scientific investors hit the sell button Wednesday despite a respectable fourth-quarter performance. The disconnect between solid results and falling shares tells an interesting story about market expectations.
The medical device manufacturer posted adjusted earnings of 80 cents per share for the fourth quarter. That topped the Street’s 78-cent projection. Sales reached $5.29 billion, climbing 12.7% organically from last year and beating the $5.28 billion consensus.
Boston Scientific Corporation, BSX
Those numbers look good on paper. But investors care more about tomorrow than yesterday.
The company’s first-quarter guidance came in lighter than expected. Boston Scientific projects organic growth of 8.5% to 10% for the current quarter. Wall Street had been counting on 9.8%. Adjusted earnings guidance of 78 to 80 cents per share also disappointed.
Shares fell 8.4% in premarket activity. The stock has now dropped 8.7% since Barron’s featured it as a pick last October.
Electrophysiology Business Misses Mark
One area stood out as particularly weak. The electrophysiology division brought in $890 million during the fourth quarter, making up roughly 17% of total sales.
That missed Stifel’s $903 million projection and fell well below the $933 million consensus estimate. The weakness centered in the U.S. market based on available information.
This segment matters to investors tracking growth potential. When a key division underdelivers, it raises red flags about momentum.
The earnings beat deserves closer inspection. Boston Scientific’s quarterly tax rate landed at 9.3%, considerably below Stifel’s 13.5% estimate. That favorable tax treatment helped inflate the bottom line beyond what operations alone achieved.
Fourth-quarter organic revenue growth hit 15.9%, surpassing Stifel’s 15% forecast. The company showed strength across most segments. Total revenue of $5.29 billion beat Stifel’s $5.25 billion estimate, with electrophysiology being the notable exception.
Full-Year Guidance Meets Estimates
The annual outlook provides some reassurance. Boston Scientific expects adjusted earnings between $3.43 and $3.49 per share for 2026. Organic growth should reach 10% to 11% for the full year.
Both projections align with analyst estimates. The guidance implies acceleration in the second half of the year, given the slower Q1 start.
The gap between Q4’s 15.9% organic growth and the projected Q1 range of 8.5% to 10% stands out. That’s a meaningful deceleration in just one quarter.
Management appears to be baking in conservatism or facing tougher year-over-year comparisons. Either way, the slowdown concerns investors who got used to double-digit growth.
The lower tax rate that boosted Q4 results probably won’t persist at similar levels. Future quarters will require stronger operational execution to meet earnings targets.
Boston Scientific demonstrated it can still beat expectations on the top and bottom lines. But the market wants to see consistency across all business units and confidence in near-term growth prospects.
The electrophysiology performance in the U.S. market remains the biggest question mark. Without more details on what drove the miss, investors are left guessing whether this represents a one-time hiccup or the start of a trend.
