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Tuesday, July 11, 2006

Most Widely Traded 48 Hour Clock:Boston Scientific, Talk Is Cheap

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Stocks: (BSX)(MDT)(STJ)

According to Reuters, Wall Street researcher are starting to position the shares of Boston Scientific as inexpensive and worthy of a closer look. The company's purchase of troubled medical device maket Guidant has pushed the Boston Scientific stock to about $16. Investors have to go back to late 2002 to return to a period when the stock was this low.

But, the drum beat about the value of the company is beginning. One analsyst who is not sold on the stock still had relatively positive things to say about the firm: "Jeff Jonas, portfolio manager with Gamco Medical Opportunities Fund, said Boston Scientific is trading at a discount of about 30 percent to rival ICD makers Medtronic Inc. (MDT) and St. Jude Medical Inc. (STJ), based on forward earnings before interest, taxes, depreciation and amortization", according to Reuters.

Before buying Guidant, Boston Scientific has terrific numbers, which makes the move all the more puzzling. Revenue in 2003 was $3.476 billion. By 2005, this number hit $6.283 billion.

Guidant was a mistake, and perhaps does not belong as part of a public company, at least while it works out its multiple product problems and tussles with the government over product problems flagged by the FDA. If Boston Scientific wants to get its cache with investors back, it may want to undo the Guidant deal. Private equity firms love looking at troubled companies that could be opportunities. As a private company, Guidant would have a chance to address its problems without dragging down Boston Scientific shareholders.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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