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Investing.com -- Boston Scientific Corp (NYSE:BSX). has had its issuer credit rating and its issue-level rating on its senior unsecured debt upgraded to ’A-’ from ’BBB+’ by S&P Global Ratings. This change is due to the company’s strong performance, which has exceeded expectations, and its stable outlook. The short-term rating remains at ’A-2’.
Boston Scientific Corp. has been showing solid organic growth and generating strong free cash flows. Over the next two years, the company is projected to generate growth of 11-13%, with EBITDA margins of 27%-28%. The company’s financial policies are expected to remain conservative, maintaining S&P Global Ratings-adjusted net leverage of under 2.5x, even as it continues to supplement its growth with moderate-size tuck-in acquisitions.
Boston Scientific has been outperforming expectations in terms of growth, margin, and cash flow. This is largely due to the strong organic growth of its portfolio of newer products, such as WATCHMAN, which grew 19.2% in 2024, and its pulse field ablation system FARAPULSE. The company’s top-line organic growth was 16.4% in 2024, led by its cardiovascular franchise, which grew 21.9%. For the full year of 2025, total revenue is expected to increase 12%-13%. This is based on healthy procedural demand and higher-than-market growth for many of Boston Scientific’s franchises, supplemented by midsize tuck-in acquisitions.
The company’s EBITDA margins are projected to improve to around 28% from 27.6%, benefiting from operating leverage. The threat of tariffs is not viewed as a significant development for the company, given its limited manufacturing in Mexico, Canada, and China.
Boston Scientific’s financial policy is consistently conservative. The company has a successful track record of acquiring technologies and new products to drive revenue and earnings growth, while maintaining a conservative financial profile. The company is expected to continue to pursue acquisitions to further expand its portfolio and product pipeline but will focus on midsize tuck-in acquisitions. The company has conducted roughly $3.4 billion in acquisitions across 2022-2023 and approximately $5 billion in 2024, including the $3.7 billion acquisition of Axonics Inc. in November. The company is projected to conduct $4 billion-$5 billion in annual acquisitions, which is within its stated gross leverage target of 2.25x-2.50x.
The stable outlook reflects expectations that Boston Scientific will continue to generate solid top-line growth and strong free cash flow while maintaining S&P Global Ratings-adjusted debt leverage of less than 2.5x over the long term. This is due to its solid and diverse organic growth prospects, improving EBITDA margins, and strong cash flow.
The rating could be lowered if the company’s leverage exceeds 2.5x, due to a shift to a more aggressive financial policy, larger-sized acquisitions, major share repurchases, or significant setbacks in its operating performance. On the other hand, the rating could be raised if Boston Scientific commits to maintaining sustained S&P Global Ratings-adjusted net leverage of under 2.0x while continuing to generate strong growth and strengthening the business to be more in line with ‘A’-rated peers.
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