HOLX – Base Case iCDS 94bps, Negative Case iCDS 130bps, 2028 4.625% Bond YTW of 5.300%, iYTW of 4.983%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
March 31, 2025
- Credit markets are accurately stating HOLX’s credit risk with a YTW of 5.300% relative to an Intrinsic YTW of 4.983% and an Intrinsic CDS of 94bps. However, 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.OII – Base Case iCDS 164bps, Negative Case iCDS 223bps, 2028 6.000% Bond YTW of 6.725%, iYTW of 5.628%, Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
- Earnings Call Forensics™ analysis of the firm’s Q1 2025 earnings call (02/05/2025) highlights that management is confident their revenue grew from $2.5 billion to $4 billion over the last decade and their sales will increase in the second half of the year with improving margins.
