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Bausch Health: Poised to Rise Further?
Stock Analysis & Ideas

Bausch Health: Poised to Rise Further?

Bausch Health Companies (BHC) stock has been a good performer in the past year, as its shares have gained 63.5% on the New York Stock Exchange.

Supported by solid catalysts, I expect the stock to keep on rising. Thus, I am bullish on this stock. (See Analysts’ Top Stocks on TipRanks)

Based in Laval, Canada, Bausch Health Companies manufactures various pharmaceutical and medical device products.

The portfolio comprises over-the-counter products targeting eye health and dermatology, as well as gastroenterology therapeutics areas.

Its products are being marketed globally.

Second Quarter Earnings

Many leading brands performed very well during the second quarter of 2021, making such progress that total revenue rose 26.2% to $2.1 billion, up from $1.7 billion in the prior-year quarter.

Despite the improvement, revenue fell shy of analysts’ projections by $20 million. The adjusted EPS of $0.97 did beat the average consensus by $0.02, however.

The economic recovery from the COVID-19 pandemic produced positive effects which helped the company achieve a significant increases in adjusted EBITDA (to $826 million, up 23.8% year-over -year), and in operating cash flows (to $395 million, up nearly 100% year-over-year).  

Portfolio Updates and Catalysts

The balance sheet remains robust despite a $300-million fine due to the illegal monopoly position regarding the diabetes drug Glumetza. It has nearly $2 billion in cash on hand, and no debt maturities before 2026.

This makes it easier for Bausch to identify higher-margin businesses, and add them to its portfolio.

Next year, the company will market a specific treatment, called XIPERE, for U.S. patients with a type of eye inflammation. Of its kind, Bausch’s therapy is the only therapy available for U.S. patients.

The development of an eye drop, called NOV03, for patients suffering from dry eye disease is on track for a marketing application. 

In Canada, Bausch has its just approved topical remedy, called ARAZLO, for over 5.5 million people living with acne.  

Full-Year 2021

The company expects total revenues to be between $8.4 billion and $8.6 billion, while analysts project $8.5 billion.

The adjusted EBITDA should be between $3.35 billion and $3.5 billion, a bit lower than the previous guidance range of $3.4 billion to $3.55 billion.

Wall Street’s Take

In the past three months, six Wall Street analysts have issued a 12-month price target for BHC.

The average Bausch Health Companies price target is $35.50, implying 23.8% upside potential. The analyst rating consensus is a Moderate Buy rating, based on five Buy ratings and one Sell rating.

Summary

The stock should sustain its upturn course, as its sales are well established and in profitable markets. A couple of short-term catalysts could make the share price rise even faster. 

Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.

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