BHC - Embedded Expectations Analysis - 2020 12 22
Bausch Health Companies Inc. (BHC:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 9.2x Uniform P/E, implying bearish expectations for the firm. However, although management appears concerned about the Bausch + Lomb spinoff, operational cash flow guidance, and inventory management, market expectations are overly bearish, and longer-term equity outperformance is warrantedSpecifically, management may lack confidence in their ability to meet their $1 billion operational cash flow guidance, sustain organic EBITDA growth, and manage inventory. Moreover, they may have concerns about the performance of Solta Medical and the sustainability of surging Pepcid demand. Furthermore, management may lack confidence in their ability to focus on both BHC and Bausch + Lomb and in their ability to continue benefiting from channel inventory rebalancing. Additionally, they may be concerned about the coronavirus' impact on patient visits and rising milestone payments. Finally, management may have concerns about the sustainability of the surgical business and the U.S. market's recovery
Although management appears concerned about the Bausch + Lomb spinoff, operational cash flow guidance, and inventory management, market expectations are overly bearish given the firm's overblown market concerns. As such, longer-term equity outperformance is 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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