Wells Fargo has reaffirmed its Overweight rating and $23.00 price target for Bausch & Lomb Corp. (NYSE: BLCO), a prominent player in the eye health sector.
The endorsement comes amid reports that private equity firms Blackstone (NYSE:BX) and TPG Capital are considering a joint bid for the company.
The Financial Times disclosed that while other private equity contenders have withdrawn from bidding, Blackstone and TPG Capital remain interested.
TPG's existing ownership of BVI, a company in the same sector, could mean a strategic advantage if combined with Bausch & Lomb, potentially improving its stance in the ophthalmic surgery market.
Although the possibility of a transaction is still uncertain, the projected valuation of the deal aligns with Wells Fargo's expectations, potentially reaching $13-14 billion, or up to approximately $25 per share. This estimation is consistent with a previous analysis by Wells Fargo, which predicted a 30% premium on Bausch & Lomb's share price as of September 13, prior to the initial reports of a potential sale.
In other recent news, Bausch & Lomb reported a robust 20% constant currency revenue growth in the second quarter of 2024, leading to an increase in its full-year revenue forecast to between $4.7 billion and $4.8 billion.
This growth has been attributed to the successful launch of products such as the enVista NV intraocular lens and Bausch + Lomb INFUSE contact lenses. In addition, the U.S. Food and Drug Administration has approved Bausch + Lomb's enVista Envy intraocular lens, with plans for a broader release in 2025.
Evercore ISI has upgraded Bausch & Lomb's stock rating from In Line to Outperform and raised its price target from $19.00 to $25.00, indicating optimism about the company's potential for a sale. Stifel has also raised Bausch & Lomb's price target to $19.00, maintaining a Hold rating on the stock, while Jefferies continues to support a Buy rating.
InvestingPro Insights
Recent InvestingPro data and tips offer additional context to the potential acquisition of Bausch & Lomb (NYSE:BLCO). The company's market capitalization stands at $7.35 billion, which aligns with the projected valuation range of $13-14 billion mentioned in the article, suggesting room for a premium in a potential deal.
InvestingPro Tips indicate that BLCO has seen a significant return over the last week, with a 13.3% price increase, and is trading near its 52-week high. This recent stock performance could be influenced by the acquisition rumors and Wells Fargo's positive outlook. Additionally, the company's revenue growth of 15.14% over the last twelve months and 17.49% in the most recent quarter demonstrates strong business momentum, which may be attractive to potential buyers.
However, it's worth noting that BLCO operates with a significant debt burden and is not currently profitable, with a P/E ratio of -18.0. Despite this, analysts predict the company will be profitable this year, which could be a factor in the interest from private equity firms.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for BLCO, providing a deeper understanding of the company's financial health and market position.
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