Boston Scientific Corp BSX

Boston Scientific Earnings: Strong Farapulse Adoption and Pipeline Prospects Lead to Higher FVE

Narrow-moat Boston Scientific's second-quarter results ran ahead of our expectations, and we've raised our fair value estimate to $78 per share, up from $70, after incorporating more optimistic estimates for electrophysiology, urology, and interventional cardiology. Impressive organic quarterly topline growth of 15% was fueled by strength across the MedSurg and cardiovascular portfolios. In particular, electrophysiology revenue rose 125% year over year, mainly due to the adoption of Farapulse (pulsed field ablation, or PFA) for atrial fibrillation, or AF, albeit off a small base. Nonetheless, this is the first full quarter of Farapulse performance since it was launched in the US. We think the enthusiastic reception reflects both strong execution by Boston's commercial organization, as well as underlying demand for the safety advantages of Farapulse. While teaching- and research-oriented providers seem to be comfortable with AF ablation as an option for patients, we suspect providers beyond those institutions were less comfortable with ablation than medical therapy to address the risk of stroke.