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Fundamental View
AS OF 11 Dec 2025SBUX operates and licenses Starbucks cafe locations. The company is current midway through a restaurant revamp aimed at boosting traffic following weak results in 2024. The program aims at improving the in-store coffee shop experience by investing in labor and reducing the prioritization of takeaway.
The turnaround program has a large labor investment component that is weighing on margins. The company has a strong cash flow cushion and management has committed to high-BBB ratings, but leverage has crept to levels above the ratings range.
A JV deal with Boyu Capital, a Chinese private equity firm, is aimed to turn operations around in a struggling Chinese market, by both improving in-store experience and local relevance, and by expanding locations.
Business Description
AS OF 11 Dec 2025- SBUX is a leading coffee roaster and retailer. The company operates and licenses over 40,000 Starbucks locations worldwide where it sells premium coffee beverages as well as other specialty drinks and prepared foods. Slightly over half the locations are company operated (52%) and the rest are licensed to third party operators.
- In F2025, SBUX generated $37.2 bn in revenue and $5.5 bn in adjusted EBITDA. SBUX has three reporting segments: N. America (74% of F2024 revenue), which covers cafes in the U.S. and Canada; International (21%), which includes China, Japan, Latin America, and EMEA; and Channel Development (5.0%) which includes revenue from other branded products sold outside retail locations through partnerships with large consumer companies such as Nestle and PepsiCo.
- On a geographic basis, SBUX's two largest regions are the U.S. (47% of cafes), and China (37%).
Risk & Catalysts
AS OF 11 Dec 2025SBUX entered an agreement to form a JV with Boyu Capital to operate the company’s retail coffee business in China. The deal is expected to finalize in F2Q26, and the company did not explicitly state where proceeds would be allocated.
In response to the activist attacks, SBUX announced an unexpected change in CEO and hired Brian Niccol, a veteran of the quick service restaurant industry with a successful track record at Taco Bell and Chipotle.
Lower discretionary spending in the U.S. could continue to weigh on SBUX’s sales outlook. We view its premium-priced beverage offerings as having significant risk of consumer trade down into more value-oriented options.
Investments behind the company’s new store imaging have increased costs and weighed on margins, in large part due to significant investments in labor.
Key Metric
AS OF 11 Dec 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 4Q25 |
|---|---|---|---|---|---|
| Revenue | 29,061 | 32,250 | 35,976 | 36,176 | 37,184 |
| EBITDA | 6,775 | 6,385 | 7,252 | 7,001 | 5,463 |
| EBITDA Margin | 23.3% | 19.8% | 20.2% | 19.4% | 14.7% |
| EBITDA-Capex to Revenue | 18.3% | 14.1% | 13.7% | 11.7% | 8.5% |
| Total Debt | 14,616 | 15,044 | 15,400 | 15,568 | 16,075 |
| Net Debt | 8,160 | 12,226 | 11,848 | 12,282 | 12,855 |
| Net Leverage | 1.2x | 1.9x | 1.6x | 1.8x | 2.4x |
| Lease Adjusted Debt to EBITDAR | 2.9x | 3.1x | 2.8x | 3.0x | 3.7x |
| EV / EBITDA | 20.4x | 17.1x | 16.1x | 17.6x | 20.0x |
CreditSight View Comment
AS OF 29 Jan 2026SBUX is in the midst of an operational turnaround plan intent on reigniting foot traffic by improving the in-store experience. The “Back to Starbucks” program has come at the expense of margin due to heavy investments in labor. While the plan is ultimately to increase transactions and tickets due to improved experiences, we are skeptical that the company will be able to recoup the margin. Also, the strategy comes at a time when economic uncertainty could weigh on discretionary purchases. Management has committed to high-BBB ratings, but the margin compression is driving leverage creep. We recommend a wait and see approach to the name and favor McDonald’s bonds in the meanwhile.
Recommendation Reviewed: January 29, 2026
Recommendation Changed: May 01, 2024
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Fundamental View
AS OF 09 Dec 2025Petron’s delivered a robust set of result in 9M25; we expect Petron’s credit metrics to improve YoY, driven by improvement in its EBITDA and lower debt. We expect FY25 EBITDA to improve YoY owing to double-digit YoY-decline in crude oil input costs in FY25, though partially offset by a single-digit YoY decline in sales volume.
About two-third of its total revenues are derived from the Philippines and are indexed to Dubai crude prices, which allows for smooth cost pass-throughs and good insulation from crude price volatility.
Free cash flows are typically negative due to inventory fluctuations that outweigh low capex.
Business Description
AS OF 09 Dec 2025- Petron is the largest oil refining and retailing company in the Philippines, and the third largest player in Malaysia. It maintains a 24% market share in the Philippines (followed by Shell and Caltex) and a 20% market share in Malaysia (largest being Petronas), based on total fuel sales volumes.
- Petron has a total refining capacity of 268k barrels/day (bpd) and accounts for about 30% of the Philippines' fuel needs. Its petroleum refining facilities include the Limay Refinery in Bataan, Philippines (capacity of 180k bpd; 67% of total) and the Port Dickson Refinery in Negeri Sembilan, Malaysia (capacity of 88k bpd; remaining 33% of total).
- Petron's refineries process crude oil into a full range of petroleum products including gasoline, diesel, LPG, jet fuel, kerosene and petrochemicals.
- It further markets and retails these fuel products through its fuel service stations located across the Philippines (~1,800 outlets) and Malaysia (>800 outlets).
- Petron sources its crude oil supplies from third-party suppliers, namely Saudi Aramco, Kuwait Petroleum Corporation and Exxon Mobil, which are bought on the basis of term contracts and in the spot market.
- Petron mainly supplies its petroleum and fuel products to customers in Malaysia and the Philippines (~95% of annual revenue).
- Petron is 68% owned by San Miguel Corporation (SMC), one of the largest and most diversified conglomerates in the Philippines based on total revenues and assets. SMC's CEO, Mr. Ramon Ang, is also Petron's CEO.
Risk & Catalysts
AS OF 09 Dec 2025Petron cannot fully pass on higher crude oil input costs to customers in Malaysia.
Petron operates in low-margin business (EBITDA margins ~5%) and maintains elevated credit metrics.
Petron is highly dependent on its Limay petroleum refining complex that makes up two-thirds of its total refining capacity (67%). Any events that disrupt the refinery’s operations could adversely affect Petron’s total revenues.
Key Metric
AS OF 09 Dec 2025| PHP bn | FY22 | FY23 | FY24 | 3Q24 | 3Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 74.0% | 75.1% | 74.5% | 70.8% | 71.0% |
| Net Debt to Book Cap | 65.5% | 68.2% | 67.1% | 59.7% | 60.7% |
| Debt/Total Equity | 284.2% | 301.4% | 292.0% | 242.0% | 245.0% |
| Debt/Total Assets | 70.2% | 67.6% | 64.9% | 63.6% | 61.9% |
| Gross Leverage | 10.9x | 7.1x | 7.4x | 7.9x | 6.0x |
| Net Leverage | 9.7x | 6.4x | 6.7x | 6.7x | 5.1x |
| Interest Coverage | 2.2x | 2.2x | 1.9x | 1.8x | 2.4x |
| EBITDA Margin | 3.4% | 5.3% | 4.7% | 3.8% | 7.1% |
CreditSight View Comment
AS OF 09 Dec 2025We move Petron to Market perform from Outperform, as we think the $475 mn 7.35% c.Sep-2028 perp has tightened to where we see fair value. That said, we continue to like Petron’s c.2028 for its relatively high coupon and hence high carry. Overall, we think Petron is a stable credit with an improving credit outlook. We like its full cost passthroughs for its operations in retail O&G in the Philippines, low capex, consistently improving net leverage metric (LTM 1H25: 6x), manageable debt maturity profile, proven willingness/ability to call back its perps by their first call date, strong parental support from the domestically well-reputed San Miguel Group and a 3-year tenor to first call that limits duration risk.
Recommendation Reviewed: December 09, 2025
Recommendation Changed: October 02, 2025
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Search topics about wealth insights and investments.Siam Commercial Bank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Thailand
- Region: Thailand
- Bond: SCBTB 3.9 24
- Indicative Yield-to-Maturity (YTM): 5.573% (Indicative as of March 2)
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Fundamental View
AS OF 05 Dec 2025Siam Commercial Bank (SCBTB) has been a sound and profitable bank. It has a focus on the retail segment and targets to increase margins by growing its non-traditional banking businesses. It announced a major business overhaul in September 2021 to establish a new parent company called SCB X to segregate the group’s core banking services (Gen 1) from its new fintech and digital businesses and to enable greater flexibility and independence.
Recent credit costs however have been elevated due to the riskier exposure that these entail. However, profitability remains healthy and the capital buffer is strong at both the Holdco (SCB X) and Bank (SCB) level.
Business Description
AS OF 05 Dec 2025- Siam Commercial Bank was founded as the "Book Club" in 1904. In 1907, it started operating as a commercial bank and was renamed as "The Siam Commercial Bank". It completed its IPO on the Stock Exchange of Thailand in 1976.
- The bank is 23.58% owned by the King of Thailand, and a further 23.32% is owned by the Vayupak Fund 1, which is controlled by the government.
- SCB is the fourth largest Thai bank by assets and is known for its robust retail franchise.
- Its loan profile was 36% corporate, 16% SME, and 48% retail as of September 2025.
Risk & Catalysts
AS OF 05 Dec 2025We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s and Fitch have also downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including KTB at Moody’s, which it currently rates in line with the sovereign) to negative in April and September 2025 respectively on increased risks to Thailand’s economic and fiscal strength.
The group’s business overhaul and strategic focus on retail comes with higher credit costs, particularly from the riskier target segments at the Gen 2/3 businesses. We expect a similar range for 2026 given challenges to the Thai economy including US tariffs, but SCB X’s higher NIM and low-40%s cost-income ratio provide comfortable room for that to be absorbed. We also take comfort in the ringfencing of the bank unit (SCB) from the Group’s riskier business units, and management’s minimum CET1 ratio of 16% at SCB.
Loan growth is likely to remain modest given a soft growth outlook for Thailand.
Key Metric
AS OF 05 Dec 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 2.63% | 2.50% | 2.88% | 2.87% | 2.97% |
| ROA | 1.1% | 1.1% | 1.3% | 1.3% | 1.4% |
| ROE | 8.4% | 8.3% | 9.3% | 9.1% | 10.2% |
| Equity/Assets | 13.4% | 13.5% | 14.1% | 14.2% | 13.9% |
| CET1 Ratio | 17.6% | 17.7% | 17.6% | 17.7% | 17.7% |
| Reported NPL ratio | 3.79% | 3.34% | 3.44% | 3.37% | 3.30% |
| Provisions/Loans | 1.84% | 1.45% | 1.82% | 1.76% | 1.71% |
| Gross LDR | 93% | 93% | 99% | 97% | 94% |
| Liquidity Coverage Ratio | 202% | 216% | 217% | 212% | n/m |
CreditSight View Comment
AS OF 22 Jan 2026SCB is the 4th largest bank in Thailand and has a leading retail franchise. Asset quality during COVID was poor. It created a new HoldCo structure (SCBX) in 2022 to shift digital units and unsecured retail loans outside the bank, and pledged a >16% CET1 ratio at SCB. The BOT has also ringfenced SCB which further reduces the risk for the SCBTB bonds. The NIM has been strong vs. peers as expected. We expect there to still be a sizable restructured book at SCB, and higher retail exposure amid elevated household debt has resulted in credit costs staying high, but these have been comfortably absorbed. We also see a meaningful impact to the Thai economy from US tariffs, with ripple effects in the form of lower bank NIMs and credit costs staying fairly elevated. We have an Underperform rec.
Recommendation Reviewed: January 22, 2026
Recommendation Changed: April 22, 2025
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Fundamental View
AS OF 05 Dec 2025Krung Thai Bank is the 3rd largest bank by assets in Thailand, with a 55.07% state ownership through the Financial Institutions Development Fund. We see strong government support underpinning KTB’s underlying credit profile.
The state influence opens the bank up to potentially government-directed lending; it has secured an increasingly meaningful portion of banking business from government agencies and State Owned Enterprises, which underscored its one-notch upgrade by Fitch in Dec-21.
KTB was faced with asset quality challenges in the past and had the highest NPL ratio and restructured loans among the major Thai banks. It has since de-risked its loan book, and asset quality has proven to be more resilient than its peers with lower COVID-19 restructured loans.
Business Description
AS OF 05 Dec 2025- KTB is the 3rd largest bank by assets in Thailand. The Thai Financial Institutions Development Fund owns 55.07% of the bank, and has a free float of 44.93%.
- Being the largest state-owned bank, it secures a meaningful portion of banking business from government agencies and State Owned Enterprises (SOEs) and per the bank, is the preferred bank for the government and SOE employees.
- Though state owned, the bank runs on a commercial basis and is not considered as a policy bank.
- KTB's loan profile comprised 47% retail, 25% private corporates, 10% SME, and 18% Government & SOEs at September 2025.
Risk & Catalysts
AS OF 05 Dec 2025We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s and Fitch have also downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including KTB at Moody’s, which it currently rates in line with the sovereign) to negative in April and September 2025 respectively on increased risks to Thailand’s economic and fiscal strength.
NIM pressure is set to continue into the coming quarters on the back of rate cuts to support growth, exacerbated by KTB’s domestically and large corporates focused book. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop.
However, we take comfort in KTB’s conservative focus on the government agencies/SOEs segment, which is supporting asset quality well amid the challenging environment.
Key Metric
AS OF 05 Dec 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 1.83% | 1.98% | 2.40% | 2.48% | 2.59% |
| ROA | 0.63% | 0.94% | 1.01% | 1.23% | 1.32% |
| ROE | 6.1% | 9.2% | 9.4% | 10.8% | 11.1% |
| Equity/Assets | 10.5% | 10.9% | 11.4% | 12.3% | 12.6% |
| CET1 Ratio | 15.6% | 15.6% | 16.5% | 17.9% | 18.9% |
| Calculated NPL ratio | 3.50% | 3.26% | 3.08% | 2.99% | 2.88% |
| Provisions/Loans | 1.31% | 0.93% | 1.43% | 1.18% | 1.19% |
| Gross LDR | 99% | 98% | 104% | 100% | 94% |
| Liquidity Coverage Ratio | 196% | 201% | 202% | 207% | n/m |
CreditSight View Comment
AS OF 22 Jan 2026KTB is the 3rd largest bank in Thailand by assets and the largest state-owned bank. It is 55% indirectly owned by the Thai government and thus secures meaningful business from government agencies and SOEs (~20% of total loans), which has undergirded its stable asset quality during and post-COVID; it was faced with asset quality challenges in the past, but fundamentals have improved as it de-risked its loan book. We see greater NIM pressure on KTB than most peers from the turn in base rates. We also see a meaningful impact to the Thai economy from US tariffs, with ripple effects in the form of lower bank NIMs and continued high credit costs. The CET1 ratio though is solid at ~18% and the loan mix is safer than peers. We have it on M/P as the $ AT1 has <1 year to call date.
Recommendation Reviewed: January 22, 2026
Recommendation Changed: April 22, 2025
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Search topics about wealth insights and investments.Kasikornbank
- Sector: Financial Services
- Sub Sector: Banks
- Region: Thailand
- Bond: KBANK 5.458 28
- Indicative Yield-to-Maturity (YTM): 4.77%
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Fundamental View
AS OF 05 Dec 2025Kasikornbank (KBANK) is a historically sound and profitable bank.
Capitalisation is strong and the bank has among the highest CASA ratios in the banking sector. Asset quality took a surprise turn for the worse in 4Q22 due to its larger SME exposure and the bank has since focused on de-risking its portfolio. Credit costs are improving but remain elevated.
Margins are high compared to most other Thai banks we cover as a result of its strong SME franchise, but the shift in growth focus to the safer but lower yielding segments has diminished its margin lead.
Business Description
AS OF 05 Dec 2025- KBank is currently the second largest bank in Thailand. It briefly was the largest from 2018 until mid-2020, upon which Bangkok Bank completed its acquisition of Indonesia's Bank Permata and took its place.
- KBank's history can be traced back to 1945 when it was first established as Thai Farmers Bank. It was listed on the Stock Exchange of Thailand in 1976 and changed its name to Kasikornbank in 2003.
- As of September 2025, the bank's loan mix by segment consists of 41% corporate, 25% SME, 29% retail and 5% others.
- KBank is known for its strong SME franchise. It also partially owns a life insurance company, Muang Thai Life.
Risk & Catalysts
AS OF 05 Dec 2025We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s and Fitch have also downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including BBL at Moody’s, which it currently rates in line with the sovereign) to negative in April and September 2025 respectively on increased risks to Thailand’s economic and fiscal strength.
KBANK has a higher retail/SME loan mix and sizable restructured loans portfolio (~8.8% of total loans), so credit costs remain elevated compared to peers with guidance now revised to 165-170 bp for 2025. We expect a similar range for 2026 given challenges to the Thai economy including US tariffs, but KBANK’s higher NIM and low-40%s cost-income ratio provide comfortable room for that to be absorbed. The focus on safer segments is helping to rein in credit costs.
KBANK’s switch to focus on safer segments however will weigh on the NIM, which is compounded by more rate cuts from the BOT to support growth. The NIM currently remains higher than most of its peers.
Key Metric
AS OF 05 Dec 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 2.38% | 2.36% | 2.52% | 2.64% | 2.59% |
| ROA | 0.98% | 0.86% | 0.99% | 1.15% | 1.19% |
| ROAE | 8.3% | 7.3% | 8.2% | 9.0% | 9.1% |
| Equity / Assets | 13.1% | 13.4% | 13.9% | 14.9% | 15.2% |
| CET1 Ratio | 15.5% | 15.9% | 16.5% | 17.4% | 18.7% |
| Gross NPL ratio | 3.76% | 3.19% | 3.19% | 3.20% | 3.19% |
| Provisions / Loans | 1.73% | 2.11% | 2.08% | 1.90% | 1.64% |
| Gross LDR | 93% | 91% | 92% | 91% | 88% |
| Liquidity Coverage Ratio | 174% | 164% | 195% | 184% | n/m |
CreditSight View Comment
AS OF 22 Jan 2026Kasikornbank is the 2nd largest bank in Thailand. We are cautious about its one quarter loan book exposure to SMEs given the macro backdrop; credit costs spiked in 4Q22 mainly from the SME book and high yield small ticket lending, and the restructured loan book remains sizable. The bank however has switched to focus on safer segments, which is weighing on the historically high NIM but helped to stabilize credit costs. Credit costs remain fairly elevated but comfortably absorbed thus far. Capital is high with CET1 at ~18%. The NIM though is on a decline from lower rates, safer new loans, higher parking of funds in liquidity. We see a meaningful US tariff impact, with ripple effects in the form of lower bank NIMs and credit costs staying fairly elevated. We have an Underperform rec.
Recommendation Reviewed: January 22, 2026
Recommendation Changed: April 22, 2025
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Search topics about wealth insights and investments.Bangkok Bank
- Sector: Financial Services
- Sub Sector: Banks
- Region: Thailand
- Bond: BBLTB 4.507 30
- Indicative Yield-to-Maturity (YTM): 4.39%
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Fundamental View
AS OF 05 Dec 2025- Bangkok Bank is a family run conservative financial institution, with high capital and liquidity levels.
- It acquired Indonesia’s Permata Bank in 2020 which resulted in a meaningful decline in its CET1 ratio to 14%. It has been built back to 18%. Management aims to keep the CET1 ratio above ~16% in preparation for Basel III final reforms.
- Profitability (ROA and ROE) has historically been below the industry average, due in part to higher exposure to the lower-yielding corporates segment that has resulted in a lower NIM. However, the returns gap has narrowed as this has supported its relatively better asset quality than most peers in a prolonged sluggish macroeconomic environment.
Business Description
AS OF 05 Dec 2025- Bangkok Bank was set up in 1944 and was listed on the Stock Exchange of Thailand in 1975. It is a family-run bank and the current President of the bank, Chartsiri Sophonpanich, is the grandson of the founder of the bank.
- It is the largest bank by assets in Thailand. It was briefly surpassed by Kasikornbank in 2018, but the Bank Permata acquisition has taken BBL back to No.1.
- The bank is corporate-loan focused, and the loan book was split 49% corporate, 16% SME, 12% retail, and 23% international as at September 2025. It is by far the most international amongst the Thai banks, with branches in 14 economies.
- BBL's overseas presence has been enhanced by the acquisition of Bank Permata, the 12th largest bank in Indonesia. Bank Permata's asset size is ~10% of that of BBL.
Risk & Catalysts
AS OF 05 Dec 2025- We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s and Fitch have also downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including BBL at Moody’s, which it currently rates in line with the sovereign) to negative in April and September 2025 respectively on increased risks to Thailand’s economic and fiscal strength.
- NIM pressure is set to continue into the coming quarters on the back of rate cuts to support growth. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop. However, we take comfort in BBL’s prudent provisioning, high loan loss buffers and safer large corporate book.
- The acquisition of Bank Permata of Indonesia in May 2020 provides BBL with exposure to the high growth opportunities of the Indonesian market, but this also presents higher risks.
Key Metric
AS OF 05 Dec 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 1.65% | 1.60% | 1.92% | 2.02% | 2.24% |
| ROA | 0.65% | 0.67% | 0.93% | 1.00% | 1.12% |
| ROE | 5.6% | 5.9% | 8.1% | 8.3% | 8.9% |
| Equity / Assets | 11.4% | 11.5% | 11.8% | 12.2% | 12.9% |
| CET1 Ratio | 15.2% | 14.9% | 15.4% | 16.2% | 18.0% |
| Calculated NPL ratio | 3.20% | 3.10% | 2.70% | 2.70% | 3.30% |
| Provisions / Loans | 1.38% | 1.24% | 1.26% | 1.30% | 1.49% |
| Gross LDR | 82% | 84% | 84% | 85% | 82% |
| Liquidity Coverage Ratio | 270% | 271% | 277% | 265% | n/m |
CreditSights View
AS OF 22 Jan 2026Bangkok Bank’s strength has been its large corporate book and strong capital. It completed the acquisition of Indonesia’s Bank Permata (~12% of loans) in 2Q20 which reduced its CET1 ratio to 14%, but it has since rebuilt it to ~17-18%. Returns though have been lower due to thinner corporate margins, and we see greater NIM pressure on BBL than most peers from the turn in base rates. Disclosure from BBL is less than peers and credit costs rose again in FY25. However, we take comfort in BBL’s strong loss buffers and large corporate book. We also see a meaningful impact to the Thai economy from US tariffs, with ripple effects in the form of lower bank NIMs and continued high credit costs. We have it on Market perform as its recent longer dated issues trade at fair levels.
Recommendation Reviewed: January 22, 2026
Recommendation Changed: December 03, 2025
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Fundamental View
AS OF 04 Dec 2025HCA’s volume metrics and EBITDA margins consistently best industry peers, primarily due to strong operational efficiency and an inpatient/outpatient focus within large, healthy markets.
HCA’s credit metrics have improved in recent years and leverage sits near the low end of management’s target net leverage range of 2.75-3.75x.
HCA benefits from substantial financial flexibility provided by strong FCF generation and easy access to the capital markets. The company also maintains sufficient liquidity with a well-laddered maturity schedule.
Business Description
AS OF 04 Dec 2025- HCA operates more than 190 hospitals with ~50k beds and 123 freestanding surgery units (as of 3Q25). The company operates in 20 states and England, but ~50% of its hospitals are located in Texas and Florida. HCA is the largest for-profit hospital operator in the US by revenue. HCA also purchased 41 urgent care centers in Texas from FastMed for an undisclosed amount.
- HCA has gone private twice since its initial public offering in 1969, most recently in 2006. During periods of private ownership the company has engaged in debt-financed special dividends. HCA returned to public ownership in 2011.
- HCA has been an active consolidator in the industry, acquiring General Health Services, Columbia Healthcare, Hospital Affiliates, and Healthcare Corp, among others. In rationalizing its offering of services and market focus, HCA has sold or spun-off hospital groups such as LifePoint, Triad, and HealthTrust.
Risk & Catalysts
AS OF 04 Dec 2025We see some risk of choppy operating performance tied to an unwind of acuity and payor mix benefits experienced through COVID.
HCA is exposed to certain provisions in the Big Beautiful Bill which could result in insured coverage losses and lower supplemental payments.
HCA guides to strong FY25 growth, including revenue growth of 6.2-8.4% and adjusted EBITDA growth of 9.9-12.7%.
HCA’s board recently authorized an additional $10 bn share repurchase program. The company has ~$3.3 bn of share repurchase authorization remaining (as of 3Q25).
Key Metric
AS OF 04 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 51,533 | 58,752 | 60,233 | 64,968 | 70,603 | 74,372 |
| SWB | 23,874 | 26,779 | 27,685 | 29,487 | 31,170 | 32,416 |
| Supplies | 8,369 | 9,481 | 9,371 | 9,902 | 10,755 | 11,183 |
| Adj. EBITDA | 10,037 | 12,644 | 12,067 | 12,726 | 13,882 | 15,164 |
| Total Debt | 31,004 | 34,579 | 38,084 | 39,593 | 43,031 | 44,511 |
| Gross Leverage | 3.1x | 2.7x | 3.2x | 3.1x | 3.1x | 2.9x |
| Interest Coverage | 6.2x | 8.4x | 7.3x | 6.7x | 7.2x | 6.8x |
CreditSight View Comment
AS OF 27 Jan 2026We maintain an Outperform recommendation on HCA. HCA remains the strongest hospital operator in the for-profit space, exhibiting operational stability and strong FCF generation. These strengths should help the company weather policy-related headwinds in the years ahead. We see HCA as a good alternative to some of the widest BBB-rated credits in our IG pharma universe, namely Biogen and Viatris.
Recommendation Reviewed: January 27, 2026
Recommendation Changed: May 02, 2018
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Fundamental View
AS OF 04 Dec 2025Stryker benefits from a leading position in orthopedics as well as strong franchises in medical surgery and neurotechnology. The company’s sales and EBITDA growth trajectory bests most of its medical device peers.
Stryker has exhibited discipline with capital allocation. Following larger bolt-on deals in 2022 (Vocera, $3.1 bn) and 2020 (Wright Medical, $5.4 bn) management prioritized debt reduction.
We expect SYK to manage leverage in the low- to mid-2x range as it addresses its M&A needs/wants in the aftermath of the Inari purchase.
Business Description
AS OF 04 Dec 2025- Stryker (SYK) is a global manufacturer of implants used in joint replacement & trauma surgeries; surgical equipment & surgical navigation systems; endoscopic & communications systems; patient handling & emergency medical equipment; neurosurgical, neurovascular & spinal devices among other products. Stryker generated $22.6 bn of revenues in 2024 (versus $20.5 bn in 2023).
- SYK maintains two operating segments: MedSurg & Neurotechnology (60% of 2024 consolidated revenues) and Orthopaedics & Spine (40%).
- SYK's recent sizable acquisitions include: Inari Medical ($4.9 bn) in 2025, which increased its exposure to peripheral vascular diseases; Vocera ($3.1 bn enterprise value) in 2022, which increased its digital care coordination and communication categories; Wright Medical ($5.6 bn including debt) in 2020, which increased its exposure to the trauma & extremities end market; and K2M Group ($1.4 bn) in 2018, which boosted the spine portfolio.
Risk & Catalysts
AS OF 04 Dec 2025Stryker is exposed to medical procedure volumes. While volumes have been positive, owing in part to the resumption of procedures deferred during COVID, volatility could result from economic uncertainty in the year ahead.
Stryker’s M&A interest has leaned bolt-on in nature over the past several years, including the acquisitions of Inari in 2025 ($4.9 bn), Vocera in 2022 ($3.1 bn) and Wright Medical in late 2020 ($5.4 bn).
SYK recently announced a definitive agreement to sell its US Spinal Implants business to Viscogliosi Brothers to create a newly formed company (to be named VB Spine, LLC).
SYK recently held its investor day, which covered expectations for 2026-28. Management expects organic sales growth to be at the ‘high end’ of MedTech and guides to operating margin expansion of ~150 bp through 2028. M&A remains Stryker’s top capital allocation priority.
Key Metric
AS OF 04 Dec 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Revenue | 17,108 | 18,449 | 20,498 | 22,595 | 24,381 |
| Gross Profit | 10,968 | 11,578 | 13,058 | 14,440 | 15,611 |
| R&D | (1,235) | (1,454) | (1,388) | (1,466) | (1,580) |
| SG&A | (6,427) | (6,455) | (7,121) | (7,685) | (8,547) |
| Adj. EBITDA | 4,753 | 4,755 | 5,356 | 6,158 | 6,757 |
| Total Debt | 12,479 | 13,048 | 12,995 | 13,597 | 16,595 |
| Gross Leverage | 2.6x | 2.7x | 2.4x | 2.2x | 2.5x |
| Interest Coverage | 14.1x | 14.1x | 15.0x | 15.6x | 17.1x |
CreditSight View Comment
AS OF 30 Jan 2026We maintain our Outperform recommendation on Stryker. SYK exhibits organic growth on strong procedural volumes and relatively healthy capital equipment spending. At current spreads, we like SYK versus more conservative peers, ABT and MDT, both of which carry higher leverage with less impressive organic growth. SYK offers attractive spread pickup versus both comps.
Recommendation Reviewed: January 30, 2026
Recommendation Changed: May 03, 2022
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Fundamental View
AS OF 03 Dec 2025Pfizer has ample financial resources, strong ability to de-lever, and adequate M&A capacity at current ratings.
Pfizer faces meaningful losses of exclusivity come the middle part of the decade. Management has guided to a ~$17 bn negative revenue impact from patent losses in 2025-30, including for drugs such as Xeljanz (2025), Eliquis (2026), Ibrance (2027), and Xtandi (2027).
Management expects to offset this impact with growth from pipeline development (+$20 bn of revenues by 2030) and business development (+$25 bn of revenues by 2030).
Business Description
AS OF 03 Dec 2025- Pfizer is a research-based, global biopharma company with focuses in immunology, metabolic disease, oncology, vaccines, neuroscience, and rare disease.
- PFE has completed a number of major acquisitions and divestitures in recent years. In 2009, the company acquired Wyeth for $68 bn, increasing its size by approximately 50%. Subsequently, PFE completed the acquisitions of Hospira ($17 bn), Biohaven ($12 bn), Arena ($6 bn), Medivation ($14 bn), Seagen ($43 bn), and Metsera ($7 bn), among others.
Risk & Catalysts
AS OF 03 Dec 2025Pfizer has been active with portfolio repositioning, executing the separations of its Consumer Healthcare and Established Brands (Upjohn) businesses in recent years. These transactions have resulted in weaker diversification and greater exposure to patent expirations.
Due to upcoming patent losses, Pfizer has been extremely active with M&A. The company completed the $43 bn acquisition of Seagen in December 2023, which resulted in well over a turn of leverage deterioration. More recently, PFE acquired Metsera for $7 bn.
Pfizer is also exploring the sale of its hospital drugs unit. The unit was formed through the $17 bn acquisition of Hospira in 2015. We suspect that divestiture proceeds would be used primarily for business development.
Key Metric
AS OF 03 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 41,651 | 81,288 | 101,175 | 59,553 | 63,627 | 62,785 |
| Gross Profit | 33,167 | 50,467 | 66,831 | 34,599 | 45,776 | 46,081 |
| R&D | (8,709) | (10,360) | (11,428) | (10,679) | (10,822) | (10,266) |
| SG&A | (11,597) | (12,703) | (13,677) | (14,771) | (14,730) | (13,906) |
| Adj. EBITDA | 18,027 | 33,354 | 46,153 | 22,904 | 25,865 | 25,812 |
| Total Debt | 39,836 | 38,436 | 35,829 | 71,888 | 64,351 | 61,712 |
| Gross Leverage | 2.2x | 1.2x | 0.8x | 3.1x | 2.5x | 2.4x |
| Interest Coverage | 13.1x | 26.6x | 46.8x | 39.2x | 10.2x | 12.3x |
CreditSight View Comment
AS OF 03 Feb 2026We prefer Abbvie at modestly tighter spreads given its more obvious organic growth trajectory and similar net leverage. That said, we would take Pfizer over Merck (U/P) at similar spreads given the latter’s product concentration risk and more sizeable M&A needs.
Recommendation Reviewed: February 03, 2026
Recommendation Changed: September 15, 2025
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Fundamental View
AS OF 03 Dec 2025AZN enjoys one of the strongest growth profiles in our coverage, reflecting a portfolio of innovative medicines, particularly in Oncology. The addition of Alexion supports AZN’s growth prospects, bringing strong assets in immune-mediated rare diseases.
AZN also enjoys relatively strong diversification, with core sales coming from multiple therapeutic areas and with depth across its Oncology and Biopharma platforms.
AZN’s capital allocation priorities include investment in the business, the pursuit of value-enhancing bolt-on M&A, and support for the dividend.
Business Description
AS OF 03 Dec 2025- AstraZeneca is a UK-based pharmaceutical company that researches, develops, and manufactures drugs with a focus in (i) Oncology, (ii) Cardiovascular, Renal and Metabolism (CVRM), (iii) Respiratory and Immunology, (iv) Rare Disease, and (v) Vaccines and Immune.
- AstraZeneca operates in five primary segments: Oncology, CVRM (cardiovascular, renal, and metabolism), Respiratory and Immunology, Rare Diseases, and V&I (Vaccines and Immune). AstraZeneca reported FY24 revenues of $54.1 bn, with ~41% from Oncology, ~23% from CVRM, ~15% from Respiratory and Immunology, and ~16% from Rare Diseases.
- In recent years, AstraZeneca has acquired Alexion for $39 bn, CinCor for $1.8 bn, Fusion for $2 bn, among other smaller transactions.
Risk & Catalysts
AS OF 03 Dec 2025Given that AZN’s leverage has been largely restored to pre-Alexion levels, we expect limited deliberate improvement from here. However, we expect future shareholder rewards and business development to be managed somewhat conservatively.
AstraZeneca has shown discipline with respect to leverage and capital allocation in recent years. While AstraZeneca pays a relatively aggressive dividend (~31% of LTM FCF), the company has historically been very conservative with share repurchases and has even used share issuance to fund certain acquisitions.
AZN recently lost a patent-infringement lawsuit against Samsung Biologics regarding a biosimilar version of Soliris.
Key Metric
AS OF 03 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 26,617 | 37,417 | 44,351 | 45,811 | 54,073 | 58,127 |
| Gross Profit | 21,318 | 24,980 | 31,960 | 37,543 | 43,866 | 47,887 |
| R&D | (5,991) | (9,736) | (9,762) | (10,935) | (13,583) | (15,047) |
| SG&A | (11,294) | (15,234) | (18,419) | (19,216) | (19,977) | (19,851) |
| Adj. EBITDA | 8,680 | 11,506 | 14,507 | 15,641 | 18,208 | 19,927 |
| Total Debt | 19,699 | 29,794 | 28,279 | 27,494 | 28,843 | 30,874 |
| Gross Leverage | 2.3x | 2.6x | 1.9x | 1.8x | 1.6x | 1.5x |
| Interest Coverage | 11.8x | 16.0x | 17.1x | 14.5x | 13.9x | 15.2x |
CreditSight View Comment
AS OF 10 Feb 2026We reiterate our Outperform recommendation on AstraZeneca. AZN benefits from a deep portfolio of innovative medicines and one of the strongest growth trajectories in the space (trailing only Eli Lilly). We see AZN as attractive versus NVS (U/P), a name with a less compelling growth narrative and modestly higher net leverage (~1.4x pf).
Recommendation Reviewed: February 10, 2026
Recommendation Changed: April 01, 2021
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