Boston Scientific stock toppled Wednesday after the medtech announced it had paused enrollment in a study of its pulsed field ablation technology.
Pulsed field ablation, also called PFA, used high-energy electrical pulses to treat abnormal heart rhythm and tumors. Boston Scientific launched its Farapulse PSA system earlier this year. Late last year, the company began the Avant Guard study to test the use of pulsed field ablation as a first treatment for persistent atrial fibrillation. Atrial fibrillation is a heart condition that causes the upper chambers of the heart to beat irregularly. Typically patients receive oral medications.
"A trial pause in its key drive raised eyebrows," Evercore ISI analyst Vijay Kumar said in a note.
On today's stock market, Boston Scientific stock fell 0.6% to 87.44, paring steeper losses. Shares have climbed almost 22% after hitting a low point in August.
Pulsed Field Ablation In Focus
Pulsed field ablation belongs to Boston Scientific's high-profile electrophysiology segment. These tools allow doctors to analyze a patient's heart rhythm to look for abnormalities. During the third quarter, electrophysiology sales rocketed 131% to $439 million. That beat expectations for $433.6 million, according to FactSet. Kumar expected a stronger 165% sales growth for electrophysiology.
The Avant Guard study is looking at a different population — patients with persistent atrial fibrillation — than the current Farapulse approval in patients with paroxysmal atrial fibrillation. In the latter population, patients experience brief episodes of irregular heart rhythm.
"Trial pauses are usually driven by safety signals and raise questions on outlook," Kumar said. "We think this is a terrific buying opportunity as Street may be overthinking around the risks."
He kept his outperform rating on Boston Scientific stock, and raised his price target to 95 from 90.
Total Revenue Surges, Outlook Hiked
Importantly, total revenue grew 18.2% organically in the September quarter — 400 basis points above the company's own guidance for 13% to 15% growth, Kumar said.
Across all products, Boston Scientific generated $4.21 billion in sales. On a strict, as-reported basis, sales grew 19.4% and beat forecasts for $4.04 billion. The medtech company earned an adjusted 63 cents per share. Earnings surged 26% and beat estimates for 59 cents.
Overall cardiovascular sales — which includes electrophysiology sales — climbed 25% on a reported basis to $2.73 billion. That easily beat analysts' projection for $2.58 billion. Medical-surgical sales, Boston Scientific's other segment, brought in $1.48 billion in sales, climbing 10.3% to top forecasts for $1.45 billion.
For the year, the company raised its profit outlook and now expects to earn an adjusted $2.45 to $2.47 per share, vs. its prior guidance for $2.38 to $2.42. Boston Sci also expects full-year sales to grow about 15% organically, above its previous range for 13% to 14% growth.
The earnings outlook topped Boston Scientific stock analysts' call for $2.41 a share. The company also expects sales to jump 16.5% on a strict, as-reported basis. Analysts estimate for $16.3 billion in full-year sales would rise a lower 14.4%.
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