As I said before, I traded Boston Scientific (BSX) with a good profit over 2 years ago when it was changed hands at about $7. It is now below $6 but with a much better value. I have seen reports out there speculating that BSX may be a target for takeover. I think this is a good speculation and I won't be surprised if it happens.
Boston Scientific is a medical device company, mainly focusing on cardiovascular disease. It manufactures stents and implantable cardioverter defibrillators (ICD). In this field BSX can be considered one of few dominating companies with a revenue of $7.6B. So why it is so cheap if it is such a good business. Misjudgment of its own capability! Back in 2006, BSX bought a company called Guidant that also made ICDs. For this deal, it took a good deal of debt, which was really beyond its then financial capability. Since then its stocks plunged from over $30 to now below $6. However, in the past few years, thanks to its healthy and profitable business, BSX has already paid off this debt. That's why it has recently announced that it will start to buy back its own stocks, a good sign that it also thinks its stocks are undervalued. Indeed, BSX is very cheap, when compared with its book value, over 30% discount! When a good business with a super discounted valuation out there, it is often a no-brainer takeover target for those companies with abundant cash in hand. If this happens, a few hundreds percent instant jump is not something unthinkable, given such a depressed stock price at the moment. More I think about it, more I believe so and more I become interested in this company. I hope it can drop a bit more before I start to accumulate its shares.
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