Boston Scientific (NYSE:BSX) plans to hoard most of the more than $1 billion in free cash flow it expects to generate this year so it can make acquisitions to boost its top line, CFO Jeff Capello told analysts last week.
The Natick, Mass.-based medical device giant reported 4th-quarter profits of $107 million, or 7 cents per diluted share, on sales of $1.85 billion for the 3 months ended Dec. 31, 2011. That compares with profits of $236 million, or 8 cents diluted EPS, on sales of $2.0 billion during the same period in 2010 – a top-line decline of 7.7%.
For the full year, Boston Scientific logged profits of $441 million, or 29 cents diluted EPS, on sales of $7.62 billion. That compares with losses of $1.07 billion, or 70 cents diluted EPS, on sales of $7.81 billion during 2010 – meaning 2011 sales were down 2.4%.
During a conference call with analysts discussing the results, Capello said BSX expects to bring in upwards of $1 billion in free cash flow this year. The company will set aside about a quarter of that to buy back shares of its own stock, he said, and stockpile the remainder for acquisitions.
"I think you’re going to see us get a little bit more aggressive, from a business development perspective, to try to drive some new technologies into the business to drive the revenue growth," Capello said. "I think as we continue to roll out the strategy and get more specific with some of the targets we’re looking at and given the environment that we’re in, we’re anticipating that it may become a slightly better environment from a business development perspective in terms of targets that are available that may not have been available historically.
"I think we will buy back and I think we’re comfortable saying we will use at least 1 quarter of our cash flow to do buybacks. And then thereafter, it will all be governed by what’s available and what we can get done at an appropriate price from a business development perspective," he said.
Boston Scientific spent roughly $300 million buying back 52 million shares, or about 3% of outstanding common stock, during the 4th quarter, Capello said. That leaves about $700 million remaining for buybacks, he said.
"We continue to believe that our stock price is undervalued and currently expect to use approximately ¼ of our free cash flow to repurchase shares in 2012," Capello said.
Intuitive shares reached $495.53 apiece Feb. 3, before falling back to close at $492.01. ISRG shares were down about ½ a percent to $489.62 as of about 9:45 this morning.
Zoll shares hit $71.79 Friday, ahead of a $70.10 close. ZOLL shares were trading at $69.85 as of about 9:45 this morning, down 0.4%.
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