BHC - Embedded Expectations Analysis - 2020 03 02
Bausch Health Companies Inc. (BHC:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 12.8x Uniform P/E. At these levels, markets are pricing in somewhat bearish expectations for the firm, and while management's concerns about growth, inventory, and costs suggest the potential for near-term headwinds, the firm's positioning suggests longer-term upside may remain warranted.Specifically, management may lack confidence in their ability to sustain Ocuvite, PreserVision, and International segment growth, to maintain their XIFAXAN and BRYHALI total prescription growth, and to offset loss of exclusivity pressures. Moreover, they may be concerned about inventory contraction, their supply chain investments, and the sustainability of success of their NOV03 nonaqueous eye drop and LUMIFY redness reliever products. Furthermore, management may lack confidence in their ability to reduce and manage SG&A, R&D, and restructuring costs.
However, given the fundamental strength of the business, expectations for Uniform ROA to continue to fade are far too bearish, suggesting long-term equity upside is warranted.
Valeant Pharmaceuticals International is a pharmaceutical and medical device company that develops, manufactures, and markets a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices). Co. has two operating and reportable segments: Developed Markets, which focuses in dermatology, neurology, gastrointestinal disorders, and eye health therapeutic; and Emerging Markets, which focuses primarily on branded generics, OTC products, and medical devices.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.