Fitch Revises Boston Scientific Outlook to Positive

Fitch Cites Strong Growth and Strategic Acquisition

Fitch Ratings has affirmed Boston Scientific Corporation’s Long-Term and Short-Term Issuer Default Ratings at ’A-’ and ’F1’ respectively. The agency also revised the company's outlook to Positive from Stable, signaling confidence in its strong business profile and future financial normalization.

Overview of the Situation

The positive outlook follows the recently announced $15 billion acquisition of Penumbra Inc. Fitch projects Boston Scientific's revenue will reach approximately $20 billion in 2025, representing a significant 20 percent growth. This strategic move aligns with the company's goal to expand into higher-growth adjacent markets, as Penumbra's business boasts a market growth rate of about 11 percent compared to Boston Scientific's 8 percent.

Impact on Financial Profile

Fitch anticipates the company's adjusted EBITDA leverage will peak at 3.3x by the end of 2026 before declining to 2.4x by year-end 2027 through debt repayment and earnings growth. Furthermore, annual free cash flow is projected to more than double, increasing from $1.7 billion in 2023 to approximately $4 billion in 2026. This financial strengthening supports the company's focus on high-growth market segments.

Summary

Boston Scientific's revised positive outlook from Fitch underscores strong confidence in its growth trajectory and strategic acquisitions. The market will closely monitor the integration of Penumbra and the company's ability to achieve its ambitious revenue and leverage targets in the coming years.

FAQ

Q: What is Boston Scientific's new rating outlook from Fitch?
A: Fitch Ratings has revised Boston Scientific's outlook to Positive from Stable while affirming its 'A-' and 'F1' ratings.

Q: What is driving the positive outlook?
A: The outlook is driven by the company's strong business profile and the expected financial benefits from the $15 billion acquisition of Penumbra Inc.

Q: What are the key financial projections for Boston Scientific?
A: Fitch projects 2025 revenue of approximately $20 billion and an increase in annual free cash flow to around $4 billion by 2026.

Source: Investing.com