Boston Scientific Corp. (NYSE:BSX) got some more good news from Wall Street, getting a lift from Moody’s Ratings Service, which raised the company’s outlook from stable to positive.
The rating’s service cited the company’s austerity measures under CEO J. Raymond Elliott and the recent news that Cordis Corp. would be exiting the stent business.
“The positive outlook reflects Boston Scientific’s commitment to ongoing deleveraging, combined with encouraging developments in its DES franchise,” Diana Lee, a Moody’s Senior Credit Officer wrote. “We believe this provides greater likelihood that the company may sustain investment grade credit metrics despite expectations of slowed growth in CRM.”
The investment service also affirmed the company’s Ba1 rating, where it has been since March 2009. Moody’s downgraded the company’s rating back in July 2007. The company’s rating is still a notch below investment grade, relegating it to junk bond status or, in Wall Street parlance, a “fallen angel.”
Ratings below “BB” or investment grade limit companies’ ability to raise capital. For example, under most state laws, it’s illegal for institutions that invest other people’s money to buy into companies that fall below investment grade.
However, an upgrade of the company’s outlook could signal that a ratings upgrade may be in the cards for BSX.
Elliott, who announced his retirement effective at the end of the year, said yesterday that the company will continue its austerity measures began during his tenure for the foreseeable future. He added that JNJ’s exit from the stent business was a “rare gift” for BSX.