Boston: return to heaven?

After several problems, Boston Scientific is returning from hell:

• Reshuffle the board governance.
• FDA warnings.
• Stents quality.

Can we take it for granted? Or the Guidant purchase still is the major obstacle?

Boston, again!

We like Boston Scientific. Things were not good, particularly after Guidant take-over. Market makers do not like poor performance, and Boston did not return properly, after Guidant purchase. Boston still is far away from good performance: I suspect they overpaid for Guidant, and their CFO was unhappy with the amount of leverage. Clearly, they need to fix the balance sheet and said they would do so. But that will take some time.

But, current situation is better: The observational study published in the Feb. 1 issue of the American Journal of Cardiology, the company said, showed drug-eluted stents reduced the risk of myocardial infarction, or heart attack, and death by 23 percent and 32 percent, versus 3.7 percent and 4.7 percent in bare-metal stent patients.

Healthcare stocks

One of the major drivers of services today is healthcare services. We can see a vast horizon of healthcare businesses, but we like particularly the medical devices business: pacemakers, CT, RM, ultrasound, etc.

Boston Scientific is a major medical device's player. Nevertheless, they are in bad shape, even before buying Guidant, another device's company. Sometimes, market makers love mergers and acquisitions, sometimes they don't like.

If we compare Boston Scientific with another medical devices Company, such as Johnson and Jonhson, Boston is a laggard: from 2 years ago, Boston returned - 60% versus Johnson + 10%.

We think future will be better for Boston, particularly because this: "Drug-coated stent makers are confident a Food and Drug Administration advisory panel, convened to examine the safety of the devices, will turn up no new surprises next week" and "Boston Scientific's Taxus and J&J's Cypher are the only two FDA-approved drug-coated stents. The worldwide market for the devices is estimated at more than $5 billion".

Charles Brandes, a billionaire investor, bought Boston some days ago.