BHC - Embedded Expectations Analysis - 2021 09 08
Bausch Health Companies Inc. (BHC:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with an 11.5x Uniform P/E, implying bearish expectations for the firm. However, although management appears concerned about their debt issues, Solta and B&L spinoffs, and their revenue guidance, market expectations are overly bearish, and longer-term equity outperformance is warranted.Specifically, management may lack confidence in their ability to continue to pay down debt, sustain strong cash flow from operations, and meet their revised revenue guidance. Also, they may be concerned about the sustainability of XIFAXAN prescriptions growth, the pandemic's negative impact on their performance, and Solta-related legal liabilities. Moreover, they may lack confidence in their ability to complete all the necessary internal objectives for the B&L spin off, leverage their market positioning to address debt issues through the Solta and B&L IPOs, and sustain TRx market share growth.
Although management appears concerned about their debt issues, spinoffs, and guidance, market expectations are overly bearish given the firm's improved governance and focus on deleveraging. 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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