On Wednesday, Truist Securities maintained a Hold rating on Bausch Health Companies (NYSE:BHC) with a steady price target of $8.00. The company's stock experienced a significant drop, plunging approximately 45% during intraday trading, following an unverified report by Reorg.com about Bausch Health's negotiations for a potential prepackaged Chapter 11 bankruptcy filing.
The report, aimed at addressing the company's debt issues, has circulated among various financial media outlets, but its accuracy remains unconfirmed.
Bausch Health, a pharmaceutical company, is grappling with high leverage, approximately 7 times, amidst an upcoming refinancing event and the loss of exclusivity for its drug Xifaxan in January 2028. These factors contribute to concerns about the company's solvency. Despite attempts to reach out to Bausch Health's management for comments, there has been no response at the time of reporting.
As of the first quarter of 2024, Bausch Health reported a total debt of $22 billion against a cash reserve of $755 million, with a leverage ratio of 6.7 times. The company's free cash flow is projected to hit $1.3 billion, according to Truist Securities' financial models.
In the previous quarter, management highlighted a favorable ruling for Xifaxan as a pivotal achievement towards potentially separating its Bausch+Lomb segment. However, the possibility of bankruptcy proceedings could interrupt these separation plans, as creditors might need to reassess the situation.
In other recent news, Bausch & Lomb Corporation has been the focus of several significant developments. Ahead of its Q2 earnings report, RBC Capital Markets increased the price target for the company's shares from $18.00 to $20.00, while maintaining an Outperform rating.
The firm expects Bausch & Lomb to announce Q2 revenues of approximately $1,187 million, slightly higher than the consensus estimate of $1,170 million, and an adjusted EBITDA forecast of $209 million.
Simultaneously, Health Canada approved Bausch & Lomb's enVista Envy intraocular lens (IOL), marking the product's first worldwide regulatory approval. Clinical trials in Canada demonstrated promising results, with most patients experiencing minimal visual disturbances and ease in viewing close objects without glasses. The company is also seeking regulatory approvals in other markets, including Europe.
Morgan Stanley upgraded Bausch & Lomb's stock rating from Equal-weight to Overweight, citing better performance of the company's core business than market expectations, particularly in terms of margin execution and potential for higher organic top-line growth.
The company has also reported a strong first quarter in 2024 with a 20% top-line growth on a constant currency basis, leading to an increase in the full-year constant currency revenue growth guidance to 30-50% and reaffirming its revenue guidance of $4.6 billion to $4.7 billion for 2024.
InvestingPro Insights
As investors navigate the turbulent waters surrounding Bausch Health Companies (NYSE:BHC), real-time data from InvestingPro offers a glimpse into the company's financial health and market performance. With a significant market capitalization of $5.99 billion and a negative P/E ratio of -15.97, reflecting challenges in profitability, the company's financial landscape is complex. The PEG ratio stands at a low 0.08, suggesting that the market may be expecting growth relative to its earnings trajectory. Moreover, Bausch Health has demonstrated a robust revenue growth of 13.23% over the last twelve months as of Q1 2024, which may signal underlying business strength despite recent concerns.
InvestingPro Tips indicate that Bausch Health operates with a considerable debt burden, yet analysts predict the company will become profitable this year. Additionally, the stock's recent performance has been strong, with a one-month price total return of 13.99%. These insights could be pivotal for investors considering their positions in BHC. For those looking to delve deeper into Bausch Health's prospects and access further analysis, InvestingPro offers additional tips. Using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking valuable insights that could inform investment decisions.
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