BHC - Embedded Expectations Analysis - 2021 06 04
Bausch Health Companies Inc. (BHC:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 13.0x Uniform P/E, implying bearish expectations for the firm. However, although management appears concerned about the Bausch + Lomb spinoff, revenue and margin growth, and the potential of their treatment trials, market expectations are overly bearish, andlonger-term equity outperformance is warranted
Specifically, management may lack confidence in their ability to sustain International Vision Care revenue growth, improve margins in their international Rx business, and reduce operating expenses. Furthermore, they may have concerns about the impact of their historical divestitures, the spin-off of their Bausch + Lomb (B&L) business, and the potential of their NOV03 and IDP-126 trials. Management may also lack confidence in their ability to secure more investments for their medical dermatology business, capitalize on dry eye care market opportunities, and sustain market share gains for TRULANCE. Moreover, they may have concerns about volume and pricing erosion and pandemic-related headwinds, particularly in China. Finally, management may lack confidence in their ability to further improve their Solta aesthetic business, meet their debt leverage targets, and maintain the strength of their current liquidity position.
Although management appears concerned about the Bausch + Lomb spinoff, revenue and margin growth, and the potential of their treatment trials, market expectations are overly bearish given the firm's improved governance and focus on deleveraging. As such, longer-term equity outperformance 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.
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