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HEALTHCARE: Revvity (RVTY: Baa3/BBB neg/BBB): Earnings Preview

HEALTHCARE
USBulletCredit BulletsNorth America

S&P put RVTY on Neg Outlook in May '24 on ongoing leverage concerns

  • Thresholds for BBB are 2-3x ND/E. S&P had them just over 3x in May
  • Current levels by my calcs are about 2.6x but the concern for the name is M&A appetite.
  • At their investor day in Nov '24 M&A was at $2.4bn through 2028 with a further $1.6bn for Buybacks and Dividends. With FCF $600m per year leverage isn't going to come down. The company is committed to IG... That's as much as they say
  • Given the bounce in healthcare as Covid destocking ends, we may see decent revenue numbers. Guidance is for ~$2.8bn flat on last year.
  • Forward guidance will be watched. Analysts expect only a 4% revenue increase in 2025 but the company saw 6-8% organic growth as a target with an additional 75bps per year of margin improvement.
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S&P put RVTY on Neg Outlook in May '24 on ongoing leverage concerns

  • Thresholds for BBB are 2-3x ND/E. S&P had them just over 3x in May
  • Current levels by my calcs are about 2.6x but the concern for the name is M&A appetite.
  • At their investor day in Nov '24 M&A was at $2.4bn through 2028 with a further $1.6bn for Buybacks and Dividends. With FCF $600m per year leverage isn't going to come down. The company is committed to IG... That's as much as they say
  • Given the bounce in healthcare as Covid destocking ends, we may see decent revenue numbers. Guidance is for ~$2.8bn flat on last year.
  • Forward guidance will be watched. Analysts expect only a 4% revenue increase in 2025 but the company saw 6-8% organic growth as a target with an additional 75bps per year of margin improvement.