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Boston Scientific (BSX) Stock May Trade At A Discount Despite Patent Suit

Simply Wall St · 1d ago

Boston Scientific has seen its share price fall sharply over the past year, even as it continues to invest in new medical technologies. That disconnect puts a spotlight on one question for investors, which is whether the current valuation can be explained by the cash the business is expected to generate.

  • The stock has declined 57.1% over the past year, which raises the issue of whether the market is reassessing what Boston Scientific's future cash flows are worth today.
  • The US$3.7b acquisition of Axonics in late 2024 expands Boston Scientific's neuromodulation reach and can reshape expectations for how quickly, and how reliably, the company converts those opportunities into cash.
  • If you'd rather focus on earnings, this one's for you. See what Boston Scientific's 17.6x P/E says about the price.

The issue now is whether Boston Scientific's recent share price and news flow line up with what its cash flows support on a Discounted Cash Flow (DCF) view of intrinsic value.

If you want another reference point on companies where cash generation is central to the story, compare Boston Scientific with the stocks in the solid balance sheet and fundamentals stocks screener (25 results).

Is Boston Scientific Still Cheap on Cash Flow?

The Discounted Cash Flow (DCF) model here focuses on the cash Boston Scientific can return to shareholders over time. Latest twelve month free cash flow sits at about $3.6b, and the projections assume that this pool of cash continues growing rather than shrinking over the coming decade. On that set of inputs, the DCF suggests an intrinsic value that is substantially above the current share price of $44.51.

The projected step up in future free cash flow, alongside the Axonics acquisition expanding the neuromodulation portfolio, means a lot of the DCF story rests on Boston Scientific converting a larger opportunity into reliable cash generation. The recent patent lawsuit against a Johnson and Johnson subsidiary helps explain why some investors may be cautious, even though the model points to more value than the market price implies. You can see how that gap between price and estimated worth is calculated in more detail here. Find out what Boston Scientific could be worth using our Discounted Cash Flow (DCF) estimate.

The Boston Scientific Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Boston Scientific pick up where the DCF puzzle leaves off and explain which paths for future growth, profitability and earnings would need to hold for the shares to be worth meaningfully more or less than the current price on Boston Scientific's Community page. Each narrative links a fair value to a clear storyline about Boston Scientific's potential catalysts and its key risks so you can monitor over time which version of events actually unfolds.

Community views on Boston Scientific are split between investors who see more upside in the story and those who think expectations already look full.

Bull case: 55% undervalued

"The immediate impact of the Penumbra acquisition has been somewhat heavy on the stock’s valuation for a few key reasons…"

Discover why this Narrative puts Boston Scientific at 55% undervalued.

Bear case: roughly fairly valued

"Industry consolidation and portfolio expansion, including the completed Valencia Technologies deal and the planned Penumbra acquisition, are increasing Boston Scientific’s reach in neurovascular and peripheral interventions…"

Explore why this Narrative puts Boston Scientific at roughly fairly valued.

Boston Scientific’s price is only one piece of the decision

Valuation work gives one angle on Boston Scientific, yet Simply Wall St’s broader checks have also flagged potential concerns that belong in your risk checklist before you commit fresh capital. Take a closer look at 1 warning sign before settling on a valuation.