The Market Today

Enter Boston Scientific (BSX). Just when I thought that the Johnson & Johnson/Guidant deal was done, Boston Scientific jumps in and raises the price. The coated stent market is growing by 20% a year, plus it has gross margins around 80%. You can see why everyone wants a piece of the action.
I have to give Boston Scientific some credit; they’re taking on a giant. J&J is huge (market cap of $180 billion). Boston Scientific is roughly the same size as Guidant, actually a little smaller. If J&J really wants Guidant, they’d have no trouble outbidding Boston Scientific. But the question now is “how much is J&J willing to pay.”
I’ve been critical of this deal from the start. I don’t see how you can simply forget months of rancor. I think the J&J people felt misled. Guidant was even willing to sue Johnson & Johnson to get the company to buy them. Please. J&J can do without Guidant, and I hope Boston Scientific has given them an exit strategy. Let them be someone else’s headache.
The S&P 500 fell 0.24% today and our Buy List dropped 0.22%. Fiserv (FISV) fell 4.2% due to an analyst downgrade. Our big gainer today was St. Jude Medical (STJ) which rallied on the news of Boston Scientific’s offer for Guidant.

Posted by on December 5th, 2005 at 9:25 pm


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