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(Alliance News) - Moody's Investors Service has assigned a Baa2 first time long-term issuer rating to medical products & devices manufacturer Smith & Nephew PLC, with the outlook on the rating reported as stable.
Moody's said the ratings reflect global scale, diversified portfolio and good positions in growing markets as well as long track record of organic and profitable growth with solid recovery prospects following material hit from coronavirus.
Moody's highlighted that Smith & Nephew's business profile benefits from the company's scale and diversified presence in orthopaedics, sports medicine and wound management.
The stable outlook, meanwhile, reflects Moody's expectation that Smith & Nephew will restore operating performance to pre-coronavirus levels in 2021. The ratings agency said it expects the group to grow revenues and earnings before interest, tax, depreciation and amortization organically, without experiencing major product holds, recalls or withdrawals, whilst generating solid free cash flow after dividends.
Going forward, Moody's said Smith & Nephew's ratings could experience positive pressure should the group sustainably lift its organic revenue and Ebitda growth rates to market levels coupled with stable Ebitda margins and solid free cash flow generation and the pace of debt-funded acquisitions does not accelerate materially.
Conversely, S&N's ratings could come under downward pressure if any of the conditions required for a stable outlook were not to be met or free cash flow generation turned negative or liquidity deteriorated.
Smith & Nephew shares closed 0.5% higher in London on Monday at 1,531.41 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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