Boston Scientific Corporation (BSX) vs. St. Jude Medical, Inc. (STJ): Is Either Stock Worth a Buy?

You wouldn’t know that medical device makers Boston Scientific Corporation (NYSE:BSX) and St. Jude Medical, Inc. (NYSE:STJ) are having a tough time by checking out their stock charts alone. Boston Scientific Corporation (NYSE:BSX)’s hovering near a 52-week high after pulling in gains of nearly 28% to start 2013; St. Jude Medical, Inc. (NYSE:STJ) has also done well, racking up more than 17% year-to-date. But short-term gains can be deceiving, and both companies’ recent financial struggles have kept investors awake at night.

There’s always hope for beaten-down companies looking to turn things around, however. Today, we pit Boston Scientific and St. Jude head-to-head to see which company — if either — is worth your investment.

Boston Scientific: Escaping the CRM market
It’s no secret that Boston Scientific Corporation (NYSE:BSX)’s been struggling financially lately. The company’s revenue fell nearly 5% year-over-year in 2012, although it did manage to slow its decline in its most recent quarter. The company’s top two divisions by sales, Interventional Cardiology and Cardiac Rhythm Management (CRM), have led things lower.

The CRM market’s stagnation has crushed every company involved, from Boston Scientific to the largest companies in the medical device market, such as rival Medtronic, Inc. (NYSE:MDT). Boston Scientific’s taken a particularly tough blow, however: While Medtronic’s CRM sales have only lost 3% over the past nine months, Boston’s took a crushing 7% blow in 2012. The company needs to move away from this field in the future in order to succeed, as the CRM market has already matured in advanced economies and won’t see much future growth for a while.

Unfortunately, CRM sales make up 26% of Boston Scientific Corporation (NYSE:BSX)’s total revenue right now. Interventional Cardiology sales, which fell more than 14% last year, make up another 30% of the total; in all, Boston Scientific’s exposed to revenue black holes for more than half of its sales. That won’t impress growth investors.

However, the company has been making small but important steps to diversify into higher-growth fields. Boston Scientific’s inroads into the stent market should appeal to long-term investor. Stents have become a promising field, and Boston Scientific Corporation (NYSE:BSX)’s Promus line has ranked among the top-selling drug-eluting stents alongside Medtronic’s Resolute and the clear market leader in Abbott Laboratories (NYSE:ABT)‘s Xience. Boston Scientific also has a next-generation bioabsorbable stent in development, the Synergy, which has already received CE Mark approval. It’s not quite as revolutionary as Abbott’s next-gen fully dissolving Absorb stent, but it’s enough to ensure Boston’s competitiveness in the industry going forward.

The company’s neuromodulation unit has also shown impressive growth despite its small size — it only makes up around 5% of the company’s total sales — but are these glimmers of hope enough to beat St. Jude Medical, Inc. (NYSE:STJ)?

St. Jude: Beating back the woes
St. Jude isn’t immune to the CRM market’s woes; if anything it’s in an even worse position than Boston Scientific. Nearly 52% of the company’s total sales came from its CRM business in 2012, and with sales falling 6%, that’s not a statistic that will inspire confidence in investors’ hearts.