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We are opening a new bullish trade on Boston Scientific (NYSE:BSX). BSX is a medical device company that manufactures coronary stent systems, cancer treatment catheter systems, Parkinson’s deep brain stimulation systems and more.
Medical device companies, like BSX, have been steady performers on Wall Street since 2013 as an increasing number of Americans have gained insurance coverage and are now able to receive treatment for their health conditions.
Strong Earnings and New Acquisitions
BSX released its quarterly earnings numbers last week on Feb. 6, before market open, and thrilled investors by announcing revenue numbers that were in-line with expectations and by beating earnings expectations by $0.07 per share — coming in at $2.56 billion and $0.27 per share, respectively.
Medical device companies have been able to maintain their pricing power in negotiations with insurance companies. This is a trend that is likely to continue well into the future, so BSX could see strong revenue and earnings for years to come.
BSX is also expanding the medical devices it manufactures, which could result in more sales. In November 2018, it announced it would acquire BTG plc., the surgical device manufacturer. BSX also just acquired Millipede, Inc., a company that developed technology for dealing with mitral regurgitation.
Breaking Above $38
The company’s positive earnings announcement seems to have been the catalyst investors had been waiting for to break the stock out of the consolidation range it had been in since September 2018. The post-earnings breakout at $38 completed and confirmed a “broadening-wedge” bullish continuation pattern for the stock.
Daily Chart of Boston Scientific (BSX) — Chart Source: TradingView
Whereas it had served as resistance before earnings, we anticipate $38 is now going to serve as a strong support level moving forward. If it does, we can sell slightly out-of-the-money puts on the stock and keep our entire premium when they expire. That would give us the chance to roll out our puts and collect even more income.
To find out which BSX puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.
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