Yesterday, shares of heart device maker Boston Scientific (BSX) rallied 3% to $22.01. This morning investors woke up to news of that the Centers for Medicare and Medicaid Services (CMS) has proposed a cut back in payments o various cardiovascular-surgical cases.
While we expect some wider price swings in devices makers such as BSX, STJ, and MDT, the proposed changes are not likely to be implemented as proposed. Since the CMS will now begin engaging in debates on the proposed changes, the final version of the proposal will likely be watered down once the final version is implemented.
Investors often like to shoot before they aim, and we will probably see the severity of the proposal move to a friendlier middle ground.
BSX insiders are buying.
BSX insiders have had a great track record over the years. It has been so good, that I have no doubt that they know more about their business prospects than anyone else. The stock was already down from historical levels (see chart), and the relative strength on the stock marks an attractive entry point (see RS chart).
Here is a list of the recent purchases by BSX insiders. In addition, UBS analyst Ken Weakley has a buy 2 rating on the stock with a price target of $32.
