suffered credit rating downgrades after disappointing stent sales dented
quarterly earnings last week.
Standard & Poor's lowered its corporate credit rating for the company to BBB-, just above junk status, from BBB, and its short-term rating to A-3 from A-2 on Monday. And Moody's lowered the company's unsecured debt rating to Ba2, two levels below investment grade, from Baa3, the lowest investment grade assignment, and its short-term debt rating to Not Prime from Prime-3 on Tuesday.
Both ratings companies said the outlook is negative.
"This action reflects the company's disappointing second quarter," said S&P credit analyst Cheryl Richer, "and increased concern regarding the company's ability to reduce debt in line with prior expectations."
Diana Lee, senior credit officer at Moody's, noted, "The negative outlook reflects concerns that uncertain sales recovery in key product lines and heightened competition in 2008 could contribute to even lower operating cash flows."
Moody's said the rating change was a result of four things: the fact that second-quarter results showed lower-than-expected cash flows; the lack of definitive action related to material asset sales, which could provide financial flexibility; the potential for regulatory and litigation matters to further impinge on liquidity; and the potential for covenant violations under its bank agreement over the next year.
Boston Scientific closed down 33 cents, or 2.2%, at $14.37, but was up 0.3% in recent postmarket trading to $14.42.