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Boston Scientific Sinks on $1.5B Capital Raise Announcement

support@smarteranalyst.com (Ben Mahaney)
·2 min read

Shares in Boston Scientific (BSX) pulled back 2% in after-hours trading on Wednesday after the company announced concurrent offerings of $750 million of shares of its common stock and $750 million of shares of its Series A Mandatory Convertible Preferred Stock.

The medical device manufacturer also expects to grant the underwriters separate 30-day options to purchase up to an additional $112.5 million of common stock and up to an additional $112.5 million of preferred stock.

According to the statement, Boston Scientific will use part of the proceeds from to repay in full the remaining $750 million outstanding under its $1.25 billion term loan credit facility maturing on April 2021 and to pay the related fees, expenses and premiums.

The remaining proceeds will be used for general corporate purposes, says BSX, which may include refinancing or repayment of other outstanding indebtedness and funding potential future acquisitions and investments.

The closing of each offering is not contingent upon the closing of the other offering.

J.P. Morgan and BofA Securities are acting as joint book-running managers for the offerings.

On May 15, Boston announced the pricing of a public offering of $1.7 billion senior notes with $500 million in aggregate 1.9% notes due 2025 and $1.2 billion in aggregate 2.65% notes due 2030.

BSX has plunged 18% year-to-date, but analysts are retaining an optimistic outlook on the stock’s potential. The Street has a Strong Buy consensus on Boston Scientific, with an average analyst price target of $43 (16% upside potential). (See BSX stock analysis on TipRanks)

“Despite short-term delays and disruption to current launches and the product pipeline, we continue to like BSX’s innovation and growth profile” explains BTIG’s Marie Thibault. She reiterated her Buy with a $44 PT, but ‘meaningfully’ reduced her revenue forecast for 2020 as global revenue is expected to decline 45-50% y/y in April.

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