Bausch Health Companies (BHC) has received a new Buy rating, initiated by Jefferies analyst, Glen Santangelo.
Glen Santangelo has given his Buy rating due to a combination of factors that center around the legal developments and future strategic moves of Bausch Health Companies. He anticipates a stable near-term outlook for the company and identifies the Xifaxan litigation outcome as a pivotal event that could significantly influence the stock’s performance. A favorable ruling expected in the near term would increase the likelihood of successfully executing the proposed spin-off of Bausch + Lomb (B+L), allowing Bausch Health’s shares to more accurately reflect the value of its substantial stake in B+L. Moreover, Santangelo’s analysis points towards a stable financial performance with positive organic growth across all segments, which supports the company’s solvency ahead of the strategic separation.
The importance of Xifaxan litigation is underscored by its impact on the company’s solvency demonstration, which is a prerequisite for the B+L spin-off. As Xifaxan is a major revenue contributor for the company, its legal protection from generic competition is crucial. Santangelo also sees potential in the company’s pipeline investments to mitigate revenue gaps post-2028. Furthermore, with the expectation of continued stability in the fourth quarter financial results, and a consensus on 2024 EBITDA that aligns with 2023 projections, the financial fundamentals appear to support the Buy rating. Santangelo’s price target of $14 is based on a sum-of-the-parts valuation, which includes a multiple on the projected adjusted EBITDA for Bausch Health post-spin-off and the value ascribed to the 80% stake in B+L that will be distributed to shareholders.
According to TipRanks, Santangelo is a 4-star analyst with an average return of 5.8% and a 54.97% success rate. Santangelo covers the Healthcare sector, focusing on stocks such as R1 RCM, Bausch Health Companies, and Healthequity.
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Bausch Health Companies (BHC) Company Description:
Bausch Health Companies Inc is a global specialty pharmaceutical, consumer health, and medical device company with a focus on branded products for the dermatology, gastrointestinal, and ophthalmology markets.
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