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Boston Scientific May Offset Merger Dilution

Merrill Lynch says the profits Boston Scientific (nyse: BSX - news - people ) will reap from its drug-eluting stents are likely to help the company offset expected dilution from its new agreement to acquire privately held Advanced Bionics for about $740 million in cash.


Boston Scientific said it expects Advanced Bionics to generate sales of about $82 million in 2004, an increase of about 45% over the previous year, and expects those sales to rise to about $128 million in 2005. Merrill Lynch noted recent upbeat news about Boston Scientific's stent sales and possible setbacks for some of its competitors' stent launches, and predicted "expected momentum in the drug-eluting stent fray will allow Boston Scientific to offset potential dilution." In light of its upbeat expectations, Merrill Lynch left unchanged its earnings per share estimates for Boston Scientific: $1.78 for 2004 and $2.25 for 2005.


Merrill Lynch also estimated that the market opportunity for neuro-stimulators is sizable, with the pain management market alone estimated at $425 million a year. The research firm also said Advanced Bionics received U.S. Food and Drug Administration approval for a spinal cord stimulation system in April; the firm estimates that the spinal cord stimulation system's sales could generate $128 million in 2005 for Boston Scientific and potentially earn "$200 million or so" in 2006.
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