Boston Scientific Corp. earned a ratings upgrade from the third major ratings service, but the Natick device monolith still languishes in the land of junk bonds.
Fitch Ratings raised BSC’s outlook from “stable” to “positive” and affirmed its corporate credit rating at “BB+” — just below investment grade.
The move follows upgrades by Moody’s Investors Service and Standard and Poor’s Ratings Services, based on the company’s ongoing efforts to pay down debt, its large share of the drug-eluting stent market and the promise shown in the market for cardiac rhythm management devices.
Fitch said it based its revision on “the success BSX has had in stabilizing its drug-eluting stent (DES) business and returning the cardiac rhythm management (CRM) business to growth,” also citing BoSci’s paying down of $1.3 billion in debt during the last four quarters and a lower cost structure.
The company’s new products pipeline was another factor in its favor, as was its robust research and development operation (Boston Scientific spent 13 percent of its total revenues on R&D last year). Fitch said those efforts “are expected to provide a relatively steady stream of new product introductions across BSX’s entire business, which should provide for longer-term growth and margin support.”
But if Boston Scientific wants to rise above junk bond status, “the company will need to demonstrate further leverage reduction, while maintaining strength in its operations.”