NEW YORK (GenomeWeb News) – Standard & Poor's on Thursday raised Life Technologies' corporate credit rating and the issue-level rating on the firm's secured and unsecured debt to BBB+.
Both ratings were raised from prior BBB ratings. S&P said that the outlook for the Carlsbad, Calif.-based firm is stable.
"The upgrade reflects Life Technologies' track record of steadily reducing debt leverage since its large acquisition of Applied Biosystems in 2008, which brought leverage to 3.6x on a pro forma basis," S&P's credit analyst Rivka Gertzulin said in a statement.
The financial services company said that the investment grade rating assumes that the credit metrics will stay in the range appropriate for its "intermediate" financial risk profile, and added that it sees Life Tech's business risk profile as "satisfactory."
The company has a "well-established, diverse product portfolio, high rate of customer retention, non-cyclical demand, strong operating margins, and a high proportion of recurring revenues," S&P noted. It cautioned, though, that uncertainty around government funding for scientific research and weakness in the European economy remain challenges for Life Tech.
Revenue growth is anticipated to be in the low-single digits during the next two years, driven in the near-term by the launch of "its new gene sequencing machine," S&P said, an apparent reference to Life Tech's Ion Torrent desktop sequencers.
Debt leverage is expected to continue declining "moderately" during the next two years even as the company is expected to use half of its free cash flow for share repurchases. Acquisitions should continue to be moderate, S&P said.