By Jacob Sonenshine

Investors seeking a stock unrelated to artificial intelligence should take a look at Boston Scientific.

The historic rally in everything AI has inevitably led to thoughts about how the whole thing will end. Maybe some companies' earnings will disappoint the market? Or maybe something more widespread will occur, like Big Tech significantly reducing its spending expectations? The tech-heavy Nasdaq Composite has seen several days when it was deeply in the red recently, which could foreshadow a true drawdown if any of these -- or other -- risks emerge.

With all this in mind, we look to medical-device makers. These companies are constantly enhancing their products to help improve patients' health. For example, Intuitive Surgical's new versions of its robotic surgery machines have helped the stock rise 23% in the past month, and Abbott Laboratories' newest glucose-monitoring device has brought its stock close to new highs.

In cardiac health, innovative products are giving surgeons more confidence in their decisions to operate. Spending on cardiac procedures in the U.S. is expected to grow at just over 7% annually through 2030, to about $92 billion, driven mostly by an aging population, according to Grand View Research.

is at the heart of it. Of its $20 billion in 2025 sales forecast by analysts, $13 billion is expected to come from its cardiovascular segment, up 23% year over year, according to FactSet. Some of that is because of small acquisitions and currency fluctuations.

Still, not all the growth is priced into the stock, which is trading at $100, even after its recent rally. Analysts are forecasting a 13% increase in sales of cardiovascular products next year, to $14.9 billion. The company said at its September investor day that it expects low-double digit growth over the long term as it takes market share. Analysts aren't doubting that right now, especially after the company continued its record of beating quarterly earnings estimates on Oct. 22, with greater-than-expected cardio revenue in the third quarter amid larger-than-anticipated sales across every segment.

Part of the cardio growth story is the Watchman product, a small implant that closes the left atrial appendage of patients with atrial fibrillation, or AF. This product is intended for patients who can't take blood thinners to stop blood clots. Watchman lowers the likelihood of blood clots, in turn reducing the risk of stroke.

Watchman sales grew 35% in the third quarter, reaching over 600,000 patients, or 12% of the five million total addressable market estimated by the company. The implant is preferred right now versus Abbott Laboratories' competing product, Amplatzer, judging by hospital purchases. Roughly 90% of their purchases of AF products are for Watchman implants, according to a physician survey from BTIG analyst Marie Thibault.

That isn't a surprise. The American College of Cardiology, a group of professionals that publishes medical journals, concluded Watchman has caused fewer postprocedural medical complications and is currently the safer product.

That story could continue in the first half of 2026, when Boston Scientific releases results of its Champion-AF trial. This clinical trial, reviewed by the Food and Drug Administration, will publish results for Watchman FLX, the latest version of its heart implant. FLX aims to improve the healing process and close larger appendages. Positive results on its effectiveness and safety would underscore Boston Scientific's ability to continue to grow its presence with heart surgeons -- and potentially spark stock gains.

Watchman isn't the only avenue through which Boston Scientific can protect its competitiveness. With large profit margins and hefty free cash flow -- an expected $3.4 billion this year, and growing -- the company has acquired dozens of small companies over the years. An example: It bought Elutia's BioEnvelope business for $88 million in September. Elutia sells small materials that protect cardiac patients from postoperative complications, such as infection. It's the type of deal that allows Boston Scientific to package multiple products in its offerings to surgeons, providing a competitive advantage.

Acquisitions are also instrumental in the other areas of Boston Scientific's business, including medical surgical, or MedSurg, which analysts expect to grow close to 10% annually over the long term. A subsegment of that business is urology, for which the company bought Axonics for $3.7 billion in 2024. Axonics makes an implantable device that treats bowel and bladder conditions, such as overactive bladder.

Urology sales could reaccelerate next year, CEO Mike Mahoney said on the third-quarter earnings call. Sales were interrupted after Medtronic asked the International Trade Commission to block the sale of the products over alleged patent infringements. Late last year, a jury found that Axonics didn't infringe on Medtronic's patents for competitive products. The companies reached a settlement, and Axonics products are selling without restrictions again. Management expects improving growth over the course of 2026, another potential catalyst that could unlock more confidence from the market -- and stock gains.

Overall, Boston Scientific could grow total sales by 11% in 2026 to $23.4 billion, according to FactSet. Sustaining such growth can bring profit margins a touch higher over time, as it can outpace the increase in operating expenses such as employee compensation and depreciation.

This would spur midteen earnings per share growth annually over the long term, especially as Boston Scientific continues to repurchase shares and onboard acquisitions. The company says it will prioritize deals over buybacks, but the deals will increase EPS if they are accretive.

Given management's tendency to do deals and deliver higher-than-expected growth, EPS growth could approach 20% annually, says Andrew Choi, a portfolio manager at Parnassus Investments.

That would pump the stock higher, partly because it isn't as expensive as it could be. Shares trade at 30 times expected EPS for the coming 12 months, below its peak of 36 times this year and just a 20% premium versus the iShares U.S. Medical Devices exchange-traded fund's 24.9 times. When Boston Scientific shares hit peaks this year, the premium was 28%.

So, the stock could trade at a larger earnings multiple -- and benefit from higher earnings, particularly as the market sees continued evidence that Boston Scientific can continue to take market share. "If they do 11% [sales growth], there's a path toward value creation" for shareholders, says Choi.

This doesn't mean there aren't risks: The Champion-AF trial results for Watchman could disappoint, pressuring expectations for Watchman demand, or Abbott could significantly improve Amplatzer's safety.

We doubt those risks will materialize, a key reason being that Boston Scientific can spend a lot of money on research and development to keep its offerings competitive. Analysts expect almost $2 billion of such spend this year, close to Abbott's $2.8 billion. But Abbott has to spread that spending across far more businesses, including diabetes care, while Boston can use most of that money to focus on heart-related care.

On the whole, Boston Scientific demonstrates an excellent risk/reward scenario for patients -- and for those who want to buy the stock.

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Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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October 30, 2025 08:01 ET (12:01 GMT)

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