BHC - Embedded Expectations Analysis - 2020 05 21
Bausch Health Companies Inc. (BHC:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 9.1x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about coronavirus, their Vision Care segment, and guidance suggest the potential for near-term headwinds, market expectations are overly bearish, and longer-term equity outperformance is likely warrantedSpecifically, management may have concerns about the results of their Amiselimod QT trial, U.S. Vision Care group acquisition and selling costs, and their Asia Pacific Vision Care revenue mix. In addition, they may be overstating the sustainability of U.S. Vision Care growth, and they may have concerns about declines in the Ophtho and Derm segment and Lotemax and Prolensa TRxs. Furthermore, they may be concerned about the impact of coronavirus on their R&D, account collections delays, and the postponement of elective surgeries. Moreover, they may be exaggerating future dental business demand and their ability to meet their revised and widened revenue guidance of $7.8bn-$8.2bn
Although management's concerns about coronavirus, their Vision Care segment, and guidance suggest the potential for near-term headwinds, given the firm's healthy credit profile and the fundamental strength of the business, market expectations are overly bearish, and longer-term equity outperformance is likely warranted for BHC
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.
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