On March 15,2010 when Boston Scientific’s
defibrillators were taken off the market, the Wall Street uniformly issued downgrades. Goldman Sachs downgraded to Conviction Sell.: JP Morgan said sell, Barron’s
urged investors to sell and the sell chorus chimed throughout
the Wall Street. More specifically, several Gurus pronounced that the products would not return to the market for several months.
In the face of the Wall Street’s unanimous selling calls, we issues a buy signal — the fact that we were familiar with the manufacturing process added conviction to our call. More specifically, our analysis showed that the infractions were minor paperwork infractions and our best estimate was that the products may return to the market in as few as 30 days.
On April 15, 2010 , exactly one month later,FDA allowed the products to return to the market.
Course of Action on BSX shares
We are long from $6.32. In the premarket, the stock traded as high as $7.85 — a gain of 24.2 %
in one month or 290.5% annualized. Considering out first scale out target was $8, those following the ZYX Change Method should have lightened the holding as it failed to reach the $8 mark.
For those who still hold it, we recommend holding the core position and exiting the rest based on technicals.
It is given that $BSX will report terrible earnings for the last quarter and the guidance for the present quarter will be lowered. We will take advantage of any weakness on the earnings to accumulate the shares based on technicals, preferaby in the range of $5 to $5.70.
FREE: SUBSCRIBE TO ‘GENERATE WEALTH’ NEWSLETTER