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HOLX – Base Case iCDS 77bps, Negative Case iCDS 102bps, 2028 4.625% Bond YTW of 5.533%, iYTW of 5.015%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

December 20, 2024

  • Credit markets are slightly overstating HOLX’s credit risk with a YTW of 5.533% relative to an Intrinsic YTW of 5.015% and an Intrinsic CDS of 77bps. Furthermore, Moody’s is overstating the company’s fundamental credit risk, with its Ba1 credit rating three notches lower than Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights positive signals for credit holders. HOLX’s compensation framework incentivizes management to improve all three value drivers: margins, asset utilization, and growth, which should drive Uniform ROA improvement and increased cash flows available for servicing obligations going forward. In addition, management members are material holders of HOLX equity relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation.
  • Earnings Call Forensics™ analysis of the firm’s Q4 2024 earnings call (11/4/2024) highlights that management is confident in their financial performance in Q4, that they are leaving the quarter with $2.4bn in liquidity, and that they are excited about the opportunities ahead for women’s health in 2025.

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