Intrinsic value of Boston Scientific - BSX

Previous Close

$25.78

  Intrinsic Value

$11.43

stock screener

  Rating & Target

str. sell

-56%

Previous close

$25.78

 
Intrinsic value

$11.43

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of BSX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 35.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.16
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
  5.64
  5.57
  5.52
  5.46
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
Revenue, $m
  8,386
  8,906
  9,447
  10,012
  10,600
  11,213
  11,853
  12,522
  13,220
  13,949
  14,711
  15,508
  16,342
  17,214
  18,128
  19,084
  20,085
  21,134
  22,233
  23,385
  24,592
  25,857
  27,184
  28,576
  30,035
  31,565
  33,171
  34,855
  36,622
  38,476
  40,422
Variable operating expenses, $m
 
  1,820
  1,890
  1,963
  2,039
  2,118
  2,201
  2,288
  2,378
  2,472
  2,571
  2,006
  2,114
  2,227
  2,345
  2,469
  2,598
  2,734
  2,876
  3,025
  3,181
  3,345
  3,517
  3,697
  3,886
  4,084
  4,291
  4,509
  4,738
  4,978
  5,229
Fixed operating expenses, $m
 
  6,559
  6,723
  6,891
  7,063
  7,240
  7,421
  7,606
  7,797
  7,991
  8,191
  8,396
  8,606
  8,821
  9,042
  9,268
  9,499
  9,737
  9,980
  10,230
  10,486
  10,748
  11,016
  11,292
  11,574
  11,863
  12,160
  12,464
  12,776
  13,095
  13,422
Total operating expenses, $m
  7,939
  8,379
  8,613
  8,854
  9,102
  9,358
  9,622
  9,894
  10,175
  10,463
  10,762
  10,402
  10,720
  11,048
  11,387
  11,737
  12,097
  12,471
  12,856
  13,255
  13,667
  14,093
  14,533
  14,989
  15,460
  15,947
  16,451
  16,973
  17,514
  18,073
  18,651
Operating income, $m
  447
  527
  834
  1,158
  1,497
  1,855
  2,231
  2,628
  3,045
  3,485
  3,949
  5,106
  5,622
  6,166
  6,741
  7,347
  7,988
  8,663
  9,377
  10,130
  10,925
  11,765
  12,651
  13,587
  14,575
  15,618
  16,720
  17,882
  19,109
  20,404
  21,770
EBITDA, $m
  1,262
  1,659
  1,994
  2,347
  2,717
  3,107
  3,516
  3,947
  4,401
  4,879
  5,383
  5,913
  6,473
  7,063
  7,685
  8,341
  9,033
  9,764
  10,534
  11,347
  12,206
  13,111
  14,067
  15,075
  16,139
  17,262
  18,447
  19,697
  21,016
  22,407
  23,875
Interest expense (income), $m
  233
  228
  257
  288
  320
  353
  388
  424
  462
  502
  543
  586
  631
  679
  728
  780
  834
  890
  950
  1,012
  1,077
  1,146
  1,217
  1,292
  1,371
  1,454
  1,541
  1,631
  1,727
  1,827
  1,932
Earnings before tax, $m
  177
  299
  577
  870
  1,177
  1,502
  1,843
  2,203
  2,583
  2,983
  3,406
  4,520
  4,991
  5,488
  6,013
  6,568
  7,154
  7,773
  8,427
  9,118
  9,848
  10,619
  11,434
  12,295
  13,204
  14,165
  15,179
  16,250
  17,382
  18,577
  19,838
Tax expense, $m
  -170
  81
  156
  235
  318
  405
  498
  595
  697
  805
  920
  1,220
  1,347
  1,482
  1,624
  1,773
  1,932
  2,099
  2,275
  2,462
  2,659
  2,867
  3,087
  3,320
  3,565
  3,824
  4,098
  4,388
  4,693
  5,016
  5,356
Net income, $m
  347
  219
  421
  635
  859
  1,096
  1,346
  1,608
  1,885
  2,178
  2,486
  3,299
  3,643
  4,006
  4,390
  4,794
  5,222
  5,674
  6,152
  6,656
  7,189
  7,752
  8,347
  8,975
  9,639
  10,340
  11,081
  11,863
  12,689
  13,561
  14,482

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  196
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,096
  19,030
  20,187
  21,392
  22,649
  23,960
  25,328
  26,756
  28,247
  29,805
  31,434
  33,137
  34,919
  36,783
  38,734
  40,778
  42,917
  45,158
  47,507
  49,968
  52,547
  55,251
  58,086
  61,059
  64,177
  67,447
  70,878
  74,477
  78,252
  82,214
  86,371
Adjusted assets (=assets-cash), $m
  17,900
  19,030
  20,187
  21,392
  22,649
  23,960
  25,328
  26,756
  28,247
  29,805
  31,434
  33,137
  34,919
  36,783
  38,734
  40,778
  42,917
  45,158
  47,507
  49,968
  52,547
  55,251
  58,086
  61,059
  64,177
  67,447
  70,878
  74,477
  78,252
  82,214
  86,371
Revenue / Adjusted assets
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
Average production assets, $m
  7,599
  8,069
  8,559
  9,071
  9,603
  10,159
  10,739
  11,345
  11,977
  12,638
  13,328
  14,050
  14,806
  15,596
  16,424
  17,290
  18,197
  19,148
  20,143
  21,187
  22,280
  23,427
  24,629
  25,890
  27,212
  28,598
  30,053
  31,579
  33,180
  34,859
  36,622
Working capital, $m
  -348
  -508
  -539
  -571
  -604
  -639
  -676
  -714
  -754
  -795
  -839
  -884
  -931
  -981
  -1,033
  -1,088
  -1,145
  -1,205
  -1,267
  -1,333
  -1,402
  -1,474
  -1,550
  -1,629
  -1,712
  -1,799
  -1,891
  -1,987
  -2,087
  -2,193
  -2,304
Total debt, $m
  5,484
  6,129
  6,859
  7,620
  8,413
  9,240
  10,103
  11,004
  11,945
  12,928
  13,956
  15,031
  16,155
  17,331
  18,562
  19,852
  21,202
  22,616
  24,098
  25,651
  27,278
  28,984
  30,773
  32,649
  34,617
  36,680
  38,845
  41,116
  43,498
  45,998
  48,621
Total liabilities, $m
  11,363
  12,008
  12,738
  13,499
  14,292
  15,119
  15,982
  16,883
  17,824
  18,807
  19,835
  20,910
  22,034
  23,210
  24,441
  25,731
  27,081
  28,495
  29,977
  31,530
  33,157
  34,863
  36,652
  38,528
  40,496
  42,559
  44,724
  46,995
  49,377
  51,877
  54,500
Total equity, $m
  6,733
  7,022
  7,449
  7,894
  8,358
  8,841
  9,346
  9,873
  10,423
  10,998
  11,599
  12,228
  12,885
  13,573
  14,293
  15,047
  15,836
  16,663
  17,530
  18,438
  19,390
  20,388
  21,434
  22,531
  23,681
  24,888
  26,154
  27,482
  28,875
  30,337
  31,871
Total liabilities and equity, $m
  18,096
  19,030
  20,187
  21,393
  22,650
  23,960
  25,328
  26,756
  28,247
  29,805
  31,434
  33,138
  34,919
  36,783
  38,734
  40,778
  42,917
  45,158
  47,507
  49,968
  52,547
  55,251
  58,086
  61,059
  64,177
  67,447
  70,878
  74,477
  78,252
  82,214
  86,371
Debt-to-equity ratio
  0.814
  0.870
  0.920
  0.970
  1.010
  1.050
  1.080
  1.110
  1.150
  1.180
  1.200
  1.230
  1.250
  1.280
  1.300
  1.320
  1.340
  1.360
  1.370
  1.390
  1.410
  1.420
  1.440
  1.450
  1.460
  1.470
  1.490
  1.500
  1.510
  1.520
  1.530
Adjusted equity ratio
  0.365
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  347
  219
  421
  635
  859
  1,096
  1,346
  1,608
  1,885
  2,178
  2,486
  3,299
  3,643
  4,006
  4,390
  4,794
  5,222
  5,674
  6,152
  6,656
  7,189
  7,752
  8,347
  8,975
  9,639
  10,340
  11,081
  11,863
  12,689
  13,561
  14,482
Depreciation, amort., depletion, $m
  815
  1,132
  1,160
  1,189
  1,220
  1,252
  1,285
  1,320
  1,356
  1,394
  1,434
  807
  851
  896
  944
  994
  1,046
  1,100
  1,158
  1,218
  1,280
  1,346
  1,415
  1,488
  1,564
  1,644
  1,727
  1,815
  1,907
  2,003
  2,105
Funds from operations, $m
  968
  1,350
  1,581
  1,824
  2,079
  2,348
  2,630
  2,928
  3,242
  3,572
  3,920
  4,107
  4,494
  4,903
  5,333
  5,788
  6,268
  6,775
  7,309
  7,874
  8,469
  9,098
  9,762
  10,463
  11,203
  11,984
  12,808
  13,678
  14,596
  15,564
  16,587
Change in working capital, $m
  -4
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -43
  -45
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
Cash from operations, $m
  972
  1,380
  1,612
  1,856
  2,113
  2,383
  2,667
  2,966
  3,281
  3,613
  3,964
  4,152
  4,542
  4,952
  5,385
  5,843
  6,325
  6,834
  7,372
  7,939
  8,538
  9,170
  9,838
  10,542
  11,286
  12,071
  12,899
  13,774
  14,696
  15,670
  16,698
Maintenance CAPEX, $m
  0
  -437
  -464
  -492
  -521
  -552
  -584
  -617
  -652
  -688
  -726
  -766
  -807
  -851
  -896
  -944
  -994
  -1,046
  -1,100
  -1,158
  -1,218
  -1,280
  -1,346
  -1,415
  -1,488
  -1,564
  -1,644
  -1,727
  -1,815
  -1,907
  -2,003
New CAPEX, $m
  -508
  -470
  -491
  -511
  -533
  -556
  -580
  -605
  -632
  -661
  -691
  -722
  -755
  -790
  -827
  -866
  -907
  -950
  -996
  -1,043
  -1,094
  -1,147
  -1,202
  -1,261
  -1,322
  -1,387
  -1,455
  -1,526
  -1,601
  -1,680
  -1,763
Cash from investing activities, $m
  -887
  -907
  -955
  -1,003
  -1,054
  -1,108
  -1,164
  -1,222
  -1,284
  -1,349
  -1,417
  -1,488
  -1,562
  -1,641
  -1,723
  -1,810
  -1,901
  -1,996
  -2,096
  -2,201
  -2,312
  -2,427
  -2,548
  -2,676
  -2,810
  -2,951
  -3,099
  -3,253
  -3,416
  -3,587
  -3,766
Free cash flow, $m
  85
  473
  658
  853
  1,059
  1,275
  1,503
  1,744
  1,997
  2,264
  2,547
  2,664
  2,979
  3,311
  3,662
  4,032
  4,424
  4,838
  5,276
  5,738
  6,227
  6,743
  7,289
  7,866
  8,476
  9,120
  9,801
  10,521
  11,281
  12,083
  12,931
Issuance/(repayment) of debt, $m
  -190
  709
  730
  761
  793
  827
  863
  901
  941
  983
  1,028
  1,075
  1,124
  1,176
  1,231
  1,289
  1,350
  1,414
  1,482
  1,553
  1,628
  1,706
  1,789
  1,876
  1,967
  2,064
  2,165
  2,271
  2,383
  2,500
  2,623
Issuance/(repurchase) of shares, $m
  111
  202
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -206
  911
  736
  761
  793
  827
  863
  901
  941
  983
  1,028
  1,075
  1,124
  1,176
  1,231
  1,289
  1,350
  1,414
  1,482
  1,553
  1,628
  1,706
  1,789
  1,876
  1,967
  2,064
  2,165
  2,271
  2,383
  2,500
  2,623
Total cash flow (excl. dividends), $m
  -123
  1,384
  1,393
  1,614
  1,852
  2,102
  2,366
  2,645
  2,938
  3,248
  3,574
  3,739
  4,103
  4,487
  4,893
  5,322
  5,774
  6,252
  6,757
  7,291
  7,854
  8,450
  9,078
  9,742
  10,443
  11,184
  11,966
  12,791
  13,663
  14,583
  15,555
Retained Cash Flow (-), $m
  -413
  -421
  -427
  -445
  -464
  -484
  -505
  -527
  -550
  -575
  -601
  -628
  -657
  -688
  -720
  -754
  -790
  -827
  -867
  -908
  -952
  -998
  -1,046
  -1,097
  -1,151
  -1,207
  -1,266
  -1,328
  -1,393
  -1,462
  -1,534
Prev. year cash balance distribution, $m
 
  132
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,095
  966
  1,169
  1,388
  1,619
  1,862
  2,118
  2,388
  2,673
  2,973
  3,110
  3,445
  3,799
  4,173
  4,568
  4,985
  5,425
  5,891
  6,383
  6,903
  7,452
  8,032
  8,645
  9,293
  9,977
  10,700
  11,464
  12,270
  13,121
  14,021
Discount rate, %
 
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
 
  1,018
  829
  918
  991
  1,041
  1,068
  1,074
  1,059
  1,026
  975
  862
  795
  720
  640
  558
  477
  399
  327
  262
  206
  157
  117
  85
  60
  42
  28
  18
  11
  7
  4
Current shareholders' claim on cash, %
  100
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4

Boston Scientific Corporation is a developer, manufacturer and marketer of medical devices that are used in a range of interventional medical specialties. The Company offers its products by seven businesses: Interventional Cardiology, Cardiac Rhythm Management, Endoscopy, Peripheral Interventions, Urology and Pelvic Health, Neuromodulation, and Electrophysiology. It operates in three segments: Cardiovascular, Rhythm Management and MedSurg. Its Cardiovascular segment consists of Interventional Cardiology and Peripheral Interventions businesses. Rhythm Management consists of Cardiac Rhythm Management and Electrophysiology businesses. MedSurg consists of Endoscopy, Urology and Pelvic Health, and Neuromodulation businesses. Its Interventional Cardiology product offerings include balloon catheters, rotational atherectomy systems, guide wires, guide catheters and embolic protection devices and diagnostic catheters used in percutaneous transluminal coronary angioplasty (PTCA) procedures.

FINANCIAL RATIOS  of  Boston Scientific (BSX)

Valuation Ratios
P/E Ratio 101.2
Price to Sales 4.2
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 36.1
Price to Free Cash Flow 75.7
Growth Rates
Sales Growth Rate 12.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1%
Cap. Spend. - 3 Yr. Gr. Rate 11.9%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 80.5%
Total Debt to Equity 81.4%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. -0.1%
Return On Equity 5.3%
Return On Equity - 3 Yr. Avg. -0.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 71.5%
Gross Margin - 3 Yr. Avg. 71.1%
EBITDA Margin 14.6%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 5.3%
Oper. Margin - 3 Yr. Avg. -1%
Pre-Tax Margin 2.1%
Pre-Tax Margin - 3 Yr. Avg. -4.5%
Net Profit Margin 4.1%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate -96%
Eff/ Tax Rate - 3 Yr. Avg. 14.6%
Payout Ratio 0%

BSX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BSX stock intrinsic value calculation we used $8386 million for the last fiscal year's total revenue generated by Boston Scientific. The default revenue input number comes from 2016 income statement of Boston Scientific. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BSX stock valuation model: a) initial revenue growth rate of 6.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.6%, whose default value for BSX is calculated based on our internal credit rating of Boston Scientific, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Boston Scientific.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BSX stock the variable cost ratio is equal to 20.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6399 million in the base year in the intrinsic value calculation for BSX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.2% for Boston Scientific.

Corporate tax rate of 27% is the nominal tax rate for Boston Scientific. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BSX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BSX are equal to 90.6%.

Life of production assets of 17.4 years is the average useful life of capital assets used in Boston Scientific operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BSX is equal to -5.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6733 million for Boston Scientific - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1372.18 million for Boston Scientific is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Boston Scientific at the current share price and the inputted number of shares is $35.4 billion.

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COMPANY NEWS

▶ Will Heart Valve Delay Impact Boston Scientific?   [Dec-14-17 04:55PM  Forbes]
▶ 6 Reasons Why Needham Upgraded Boston Scientific   [Dec-08-17 04:33PM  Benzinga]
▶ Boston Scientific Again Delays Heart Valve; Can It Catch Up To Rivals?   [Nov-29-17 05:18PM  Investor's Business Daily]
▶ Boston Scientific loses $3B in value prior to announcing product delay   [11:45AM  American City Business Journals]
▶ Biogen taps former Boston Scientific exec as next CFO   [Nov-21-17 10:00AM  American City Business Journals]
▶ Fitbit Inc Stock May Eventually Be a Buy After All   [Nov-20-17 06:24AM  InvestorPlace]
▶ In surprise, study finds heart stents don't solve chest pain   [Nov-03-17 08:25AM  American City Business Journals]
▶ Key Takeaways From Boston Scientific's Q3   [Nov-02-17 01:20PM  Forbes]
▶ Boston Scientific Improved Its 2017 Guidance   [07:31AM  Market Realist]
▶ Boston Scientific Dives As Abbott Rivalry Hits Pacemaker Sales   [04:23PM  Investor's Business Daily]
▶ Boston Scientific meets 3Q profit forecasts   [06:46AM  Associated Press]
▶ Employers Leaned on Radio, Social Media After Puerto Rico Storm   [Oct-09-17 06:07PM  The Wall Street Journal]
Financial statements of BSX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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