TipRanks Smart Value #55: Hidden Growth

Shrilekha Pethe on March 24, 2026

Dear Investors,

Welcome to the 55^th edition of our TipRanks Smart Value Newsletter!

This Week’s Top Value Pick: Boston Scientific Corp. (BSX)

Boston Scientific Corp. (BSX) is a U.S.-based medical technology company that develops and manufactures minimally invasive devices used in the diagnosis and treatment of cardiovascular, neurological, urological, and gastrointestinal conditions. Its operations span interventional cardiology, electrophysiology, cardiac rhythm management, endoscopy, urology, neuromodulation, and interventional oncology through platforms such as WATCHMAN, FARAPULSE, and its cardiovascular and MedSurg portfolios. BSX is one of the world’s leading medtech companies and a key provider of advanced, procedure-based medical solutions.

Transformation Playbook

Boston Scientific traces its origins to 1979, when it was founded to develop and commercialize minimally invasive medical devices. In its early years, the company focused on interventional cardiology, gaining traction with angioplasty and catheter-based technologies that aligned with a broader shift toward less invasive procedures. This focus helped establish Boston Scientific as a key player in a rapidly expanding cardiovascular market.

Growth accelerated through the 1990s and early 2000s as the company expanded its cardiovascular portfolio and built a global distribution network. A defining moment came in 2006 with the acquisition of Guidant’s cardiovascular device business, which significantly strengthened its position in cardiac rhythm management by adding pacemakers and implantable defibrillators. However, integration challenges and product issues weighed on performance in the years that followed, leading to a period of restructuring and portfolio optimization.

By the 2010s, Boston Scientific had embarked on a broader strategic transformation aimed at improving execution, profitability, and innovation. The company streamlined operations, exited underperforming areas, and increased investment in research and development. At the same time, it expanded into faster-growing adjacencies, such as electrophysiology, neuromodulation, and endoscopy, while building new growth platforms, including the WATCHMAN device for stroke prevention.

This transformation increasingly relied on acquisitions as a core growth engine. A major inflection point came in 2019 with the acquisition of BTG. The deal added a high-growth Interventional Medicine business, while non-core pharmaceutical and royalty assets were later divested to SERB in 2021, reflecting a deliberate shift toward device-focused operations.

From 2021 onward, Boston Scientific accelerated its deal activity to deepen its presence in high-growth categories. In 2021, the company acquired Preventice Solutions to expand into mobile cardiac health, purchased the surgical business of Lumenis to strengthen its urology franchise, and completed the buyout of Farapulse, securing pulsed field ablation (PFA) technology that has since become one of its fastest-growing electrophysiology platforms.

The company continued to build scale and capability in 2022 and 2023. The acquisition of Baylis Medical in 2022 enhanced its electrophysiology portfolio with advanced transseptal technologies. This was followed in 2023 by the acquisition of Relievant Medsystems, expanding into spine therapies, and the purchase of Apollo Endosurgery, strengthening its endoscopic platform.

In 2024, Boston Scientific further expanded into urology and vascular interventions through the acquisitions of Axonics and Silk Road Medical, adding differentiated technologies for urinary dysfunction and stroke prevention, respectively.

Boston Scientific’s multi-year acquisition strategy reached a turning point in January 2026 with its agreement to acquire Penumbra in a cash-and-stock deal valued at approximately $14.5 billion, marking its largest transaction since 2006. The deal is strategically significant as it represents a re-entry into neurovascular, a space the company exited in 2011 when it divested the business to Stryker. Through Penumbra, Boston Scientific would expand its presence in stroke, pulmonary embolism, and deep vein thrombosis, while adding capabilities in mechanical thrombectomy and creating opportunities to leverage its existing cardiovascular portfolio.

The transaction, expected to close later this year, aligns with the company’s long-term strategy of targeting high-growth markets and is anticipated to support its goal of delivering more than 10% organic growth through 2028, with incremental upside from the acquisition.

Alongside this transformative deal, Boston Scientific has continued to execute smaller, targeted acquisitions. In January 2026, it completed the acquisition of Nalu Medical, adding a minimally invasive, battery-free neurostimulation system for chronic pain treatment and strengthening its position in the growing non-opioid pain management market. The business is expected to generate over $60 million in revenue in 2025, with growth exceeding 25% in 2026, and is projected to become increasingly accretive over time.

The company also announced the acquisition of Valencia Technologies Corporation, which brings the FDA-approved eCoin system for treating bladder dysfunction. This tuck-in deal enhances its urology portfolio by complementing its existing neuromodulation platform and addressing a key gap in pelvic health, with minimal near-term earnings impact but meaningful long-term growth potential.

More broadly, Boston Scientific’s evolution reflects a clear and consistent strategy: using targeted acquisitions to build leadership in high-growth medtech segments such as electrophysiology, urology, vascular interventions, and cardiac monitoring, while divesting non-core assets. Combined with ongoing innovation, including advances in pulsed field ablation through its Farapulse platform, and improved operational execution, this approach has supported sustained revenue growth, margin expansion, and strong earnings performance, transforming the company into a diversified and innovation-driven medtech leader.

Integrated Medtech

Boston Scientific operates at the center of modern interventional medicine, generating revenue by developing, manufacturing, and selling minimally invasive medical devices used across a wide range of procedures. Its technologies enable physicians to treat complex diseases through catheter-based, precision-driven interventions rather than open surgery, improving patient outcomes while improving recovery times and reducing costs. This positions the company not simply as a device manufacturer, but as a medtech platform built on the integration of advanced hardware, software, data, and clinical evidence.

The business is organized into two primary segments – Cardiovascular and MedSurg – through which Boston Scientific participates in multiple large and growing procedural markets. Cardiovascular accounts for the majority of revenue at around 66% and serves as the core growth engine, spanning interventional cardiology, electrophysiology, structural heart, and cardiac rhythm management. These areas are benefiting from a sustained global shift toward minimally invasive treatment of heart disease and stroke prevention. Within this segment, electrophysiology has emerged as the fastest-growing franchise, supported by integrated platforms that combine mapping, imaging, and energy delivery. Technologies such as the FARAPULSE¹ and the WATCHMAN² are increasingly embedded in clinical workflows, contributing to strong procedural growth and expanding adoption across guideline-supported care.

MedSurg contributes the remaining share of revenue at 34% and provides a more diversified but steady growth base. This segment includes endoscopy, urology and pelvic health, and neuromodulation. Endoscopy benefits from large, recurring global procedure volumes, while urology offers consistent demand across a range of chronic conditions. Neuromodulation adds a higher-growth layer through therapies targeting chronic pain and neurological disorders, with recent acquisitions expanding the company’s capabilities across nerve stimulation technologies.

Revenue is primarily derived from direct sales to hospitals, clinics, and outpatient facilities worldwide, supported by a global commercial infrastructure and specialized sales forces aligned with physician specialties. Many of the company’s products are consumables or tied to repeat procedures, creating recurring demand and strong visibility into revenue streams.

A defining feature of the business model is its focus on innovation and targeted expansion into high-growth adjacencies. The company invests heavily in research and development while using acquisitions to add differentiated technologies that can be scaled globally. Rather than competing broadly, Boston Scientific focuses on high-impact niches where clinical innovation can reshape standards of care, then builds competitive advantage through physician training, clinical data, and integrated platforms.

Technology further amplifies this model. AI, software, and data analytics are increasingly embedded into devices and workflows, enhancing diagnostics, imaging, and treatment precision, particularly in cardiovascular interventions. At the same time, global healthcare trends, including aging populations, rising chronic disease prevalence, and increasing demand for cost-efficient care, continue to drive procedural volumes.

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1 – FARAPULSE – Boston Scientific’s pulsed field ablation platform for treating atrial fibrillation using non-thermal energy.

2 – WATCHMAN – a left atrial appendage closure device designed to reduce stroke risk in atrial fibrillation patients without long-term anticoagulation.

Innovation Flywheel

Boston Scientific continues to invest in product innovation and is continuously introducing new technologies that expand where and how it can compete. In electrophysiology, its fastest-growing business, the company is building an ecosystem around pulsed field ablation (PFA). Tools like FARAPOINT allow physicians to use PFA in more complex heart procedures, which increases the number of patients who can be treated using Boston Scientific’s technology. Meanwhile, FARAWAVE NAV helps bring this platform into new geographies like China, opening up entirely new revenue pools. In simple terms, the company is not just growing within an existing market, it is expanding the market itself while capturing more of it.

Beyond electrophysiology, Boston Scientific is applying the same strategy across other areas. SEISMIQ introduces it to the intravascular lithotripsy market (used to treat hardened arteries), Intracept EDGE expands its presence in chronic pain treatment, and TheraSphere 360 strengthens its oncology portfolio. ENROUTE supports growth in stroke prevention by enabling minimally invasive treatment of carotid artery disease. Each of these products targets a specific, high-value niche with strong demand, rather than competing broadly on commoditized devices.

The key takeaway is that this steady pipeline of innovation creates multiple independent growth drivers. Instead of relying on one blockbuster product, the company is building a portfolio where new technologies continuously add to revenue, reduce risk, and support more consistent, long-term growth.

Clinical trials are important for medtech companies like BSX as they are direct drivers of revenue growth and market expansion. When a product proves its effectiveness and safety in a clinical trial, three important things typically follow. First, physicians are more likely to adopt it, especially if the data shows better outcomes than existing treatments. Second, regulators and insurers are more willing to approve and reimburse the therapy, which is critical because most procedures depend on insurance coverage. Third, strong data can lead to expanded usage guidelines (following additional regulatory approvals), meaning the product can be used in a broader group of patients. Together, these factors can significantly increase the number of procedures performed and, therefore, revenue.

The CHAMPION trial is a clear example. It is a large, 3,000-patient randomized study comparing the WATCHMAN FLX device directly against blood thinners (DOACs) as a first-line therapy for stroke prevention in atrial fibrillation. Today, WATCHMAN is used in a narrower group of patients, but if CHAMPION shows it is as effective, or safer – it could shift into earlier lines of treatment, expanding its potential patient pool from about 5 million to as many as 20 million globally – a significant increase in market opportunity.

Other trials play a similar role across the portfolio. HI-PEITHO is evaluating the Ekosonic (EKOS) system plus anticoagulation versus anticoagulation alone in pulmonary embolism, with the potential to establish EKOS as a standard of care in a large, underpenetrated market. FRACTURE is studying the company’s SEISMIQ technology to treat intravascular lithotripsy (severely calcified artery disease) – which could validate the technology and support entry into a fast-growing vascular segment. Meanwhile, SIMPLAAFY is testing simpler, lower-risk drug regimens following WATCHMAN implantation – which could make the therapy safer and easier to use, expanding eligibility and supporting broader adoption.

Operational Edge

From a competitive standpoint, Boston Scientific is not just benefiting from favorable market growth; it is actively gaining market share. In electrophysiology (EP), the company delivered 35% growth in the U.S. in the fourth quarter, significantly outpacing competitors growing at 6.5% and 12.5%. Management clarified that the underlying EP market is growing at approximately 18% to 20%, reinforcing that this outperformance reflects share gains rather than inflated industry growth. Looking ahead, the EP market is expected to grow around 15% in 2026, with BSX positioned to continue outpacing it. PFA adoption has already reached 65% to 70% in the U.S., effectively becoming the standard of care. While some share loss is expected as new entrants emerge, the company expects to maintain leadership due to its early mover advantage and continued innovation.

The WATCHMAN franchise further illustrates this strength. Despite difficult comparisons and competing clinical studies, WATCHMAN still delivered 29% growth, underscoring strong demand and resilience. Future clinical data, particularly from CHAMPION, could materially expand its role in treatment pathways, reinforcing its long-term growth potential.

Management acknowledged capacity constraints in electrophysiology labs, especially those using PFA, but expects these to ease over time through the expansion of ambulatory surgery centers, improved imaging technologies, and more efficient procedures. Organizational changes, such as combining Peripheral Interventions with interventional cardiology into a unified Interventional Cardiology and Vascular Therapies segment, while establishing Interventional Oncology as a standalone unit, are designed to improve focus, execution, and visibility across the portfolio.

Importantly, growth is becoming increasingly diversified. Six of the company’s eight divisions outgrew their respective markets in 2025, with broader contributions expected going forward. While electrophysiology remains the primary driver, other areas such as neuromodulation, oncology, and vascular therapies are contributing to a more balanced growth profile.

From a financial perspective, the company is transitioning from a period of exceptional growth to a more normalized but still above-market trajectory. The strategy remains focused on outgrowing underlying markets, expanding margins through favorable product mix and operating leverage, and delivering consistent double-digit earnings growth.

Finally, risk factors appear manageable. Geopolitical exposure remains limited, with affected regions accounting for only about 1% of revenue, while continued investment in next-generation technologies, mapping systems, and imaging capabilities reinforces the company’s innovation-driven model.

Growth Accelaration

Boston Scientific has delivered a strong and consistent growth trajectory over the past three years, with revenue and EPS expanding at a CAGR of 17.8% and 21.3%, respectively. This performance has been driven by robust underlying demand, led by the rapid adoption of its FARAPULSE platform, which has transformed electrophysiology into its largest and fastest-growing segment. Continued momentum in the WATCHMAN franchise, expansion in urology following the Axonics acquisition, contributions from interventional platforms such as BTG and Silk Road, and steady international growth have further diversified and strengthened the revenue base.

This momentum carried into 2025. In the fourth quarter, revenue reached $5.3 billion, rising nearly 16% year-over-year. Currency added approximately 1.6 percentage points, resulting in operational growth of 14.3%, while organic growth came in at 12.7%, at the high end of guidance, indicating strong demand across core businesses rather than reliance on external factors. For FY25, revenue totaled $20.1 billion, up nearly 20%, with operational growth of 19.2% and organic growth of 15.8%, slightly ahead of expectations. Acquisitions contributed 3.4 percentage points, highlighting the company’s ability to combine organic execution with strategic M&A.

Profitability improved alongside revenue growth. Adjusted EPS was $0.80 in the fourth quarter, up 15% year-over-year, while FY25 adjusted EPS increased 22% to $3.06, marking the third consecutive year of more than 20% earnings growth. This reflects efficient scaling supported by a favorable product mix and operating leverage. Margin expansion further reinforced this trend, with gross margin improving to 70.6% and operating margin rising to 28.0%, a percentage point increase year over year.

Geographically, the U.S. remained the primary growth driver, contributing 64% of total revenue. U.S. revenue increased 17% in the fourth quarter and 26% for the full year, supported by strong adoption of advanced technologies such as pulsed field ablation and favorable pricing. In EMEA, reported growth of 5% in the fourth quarter and 3% for the full year was affected by the discontinuation of the ACURATE³ product; excluding this, underlying growth was in the high-single-digit range. Asia-Pacific delivered balanced performance, with 15% growth in the fourth quarter and 14% for the full year, led by mid-teens expansion in key markets such as Japan and China.

At the segment level, Cardiovascular remained the core growth engine, delivering over 20% organic growth. Electrophysiology led with 73% annual growth driven by FARAPULSE adoption, while the WATCHMAN franchise continued to post strong double-digit growth supported by rising procedural volumes. Interventional Oncology and Embolization generated approximately $1 billion in revenue, growing 12% organically, and Coronary interventions saw more than 20% growth in AGENT drug-coated balloons. MedSurg delivered steadier but mixed performance, with Endoscopy and Neuromodulation each growing 8%, while Urology grew 5% organically, below expectations due to supply constraints.

Cash flow generation remained strong, with free cash flow reaching $3.66 billion in 2025, a 38% increase year-over-year and a conversion rate of approximately 80%. The balance sheet remains solid, with around $2 billion in cash and a gross debt leverage ratio of 1.9x. Net debt-to-EBITDA stands at 2.2x, slightly above the sector median, though credit quality remains stable, with S&P, Moody’s, and Fitch maintaining “A-” equivalent ratings. Following the Penumbra acquisition announcement, Fitch upgraded its outlook from stable to positive. Returns on equity, assets, and invested capital rank among the top 20% in the industry.

Looking ahead, the company expects organic revenue growth of 10% to 11% in 2026, with reported growth of 10.5% to 11.5%. While this represents a moderation from 2025 levels, it remains above market growth. Adjusted EPS is projected at $3.46 at the midpoint, implying growth of 12% to 14%, below consensus expectations. Gross margins are expected to remain relatively stable due to offsetting factors such as product mix improvements and continued investment in supply chain capabilities, while operating margins are projected to expand by 50 to 75 basis points.

Free cash flow is expected to increase to approximately $4.2 billion, with conversion in the 70% to 80% range, supporting continued investment in innovation and acquisitions. Over the longer term, Boston Scientific has reaffirmed its targets through 2028, including at least 10% annual organic revenue growth, 150 basis points of cumulative operating margin expansion, and sustained double-digit earnings growth, reflecting a focus on consistent execution and long-term value creation. For the first quarter of 2026, organic revenue growth is expected to range between 8.5% and 10%, with adjusted EPS projected at $0.79 at the midpoint.

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3- Acurate was the company’s line of transcatheter aortic valve replacement (TAVR) devices.

Quality Discount

Boston Scientific’s stock has declined by around 31% over the past year from a peak near $109 in September 2025 to recent lows around $68 in March 2026. The sell-off followed the company’s 2026 guidance for 12–14% EPS growth, which, while still strong, fell short of elevated expectations after multiple years of 20%+ earnings growth.

Despite this recent weakness, analysts remain bullish about BSX’s long-term outlook and largely view the recent pullback as a reset in expectations rather than a weakening of the underlying business. The company’s electrophysiology franchise continues to anchor the growth story, driven by strong adoption of pulsed field ablation, which has reached roughly 70% penetration in the U.S. This has reinforced the company’s clinical leadership while supporting durable, procedure-driven demand.

More broadly, consistent revenue expansion and improving margins highlight a scalable business model that continues to translate growth into higher earnings. Strong free cash flow generation and a solid balance sheet further enhance financial flexibility, enabling continued investment in innovation and strategic acquisitions.

Street consensus implies roughly 53% upside from the current share price, while more bullish forecasts suggest potential gains of up to 78%. This wide dispersion reflects differing assumptions around the durability of growth, margin expansion, and valuation multiples. A discounted cash flow analysis aligns with this view, suggesting the stock may be trading at roughly a 20% discount to its intrinsic value.

The recent correction has also pushed valuation below historical norms. BSX is currently trading at more than a 25% discount to its historical averages based on non-GAAP trailing and forward P/E ratios, forward EV/EBITDA, price-to-book, and price-to-cash flows, creating a potential valuation re-rating opportunity.This dynamic is particularly compelling, as it combines a high-quality business with a margin of safety, with the current discount likely reflecting near-term concerns, such as moderating growth or acquisition-related uncertainty, rather than any structural deterioration.

Compared to peers like Medtronic, Edward Lifesciences, Abbott Laboratories, and Stryker, BSX is trading in the moderate valuation range based on non-GAAP trailing P/E ratio and EV/EBITDA multiples. Boston Scientific trades at a higher forward P/E ratio compared to peers such as Medtronic and Abbott Laboratories, but remains below Edwards Lifesciences. Its higher forward P/E ratio versus MDT and ABT is supported by faster revenue and EBITDA growth, along with a higher ROE, while margins remain in line with those of its peers. At the same time, it trades below EW, which commands a premium due to its focused structural heart portfolio and stronger long-term growth visibility.

Notably, BSX’s forward PEG ratio, the lowest among its peers, suggests that its valuation is well supported by its earnings growth. While the stock may not appear traditionally cheap, it offers an attractive growth-at-a-reasonable-price profile as execution remains strong.

The company did not repurchase shares in FY25. Importantly, the company retains authorization to repurchase up to $1 billion of stock as of year-end 2025, providing a meaningful lever to enhance shareholder returns and capitalize what appears to be an attractive valuation.

1 Investing Takeaway

Boston Scientific presents a compelling value proposition, not because it appears traditionally cheap, but because its current valuation does not fully reflect the strength and durability of its underlying business. The recent pullback has reset expectations, even as the company continues to execute well across its core franchises, supported by innovation, diversified growth drivers, and strong cash flow generation. Its positioning in high-growth, procedure-driven markets and its ability to consistently convert innovation into earnings create a foundation for sustained compounding. At the same time, valuation multiples have moderated relative to historical levels, offering a margin of safety. For investors, this combination of quality, growth visibility, and a more reasonable entry point positions the stock as an attractive, growth-at-a-reasonable-price opportunity.

Category: Smart Value