Bausch Health Care: A Dog Or A Diamond In The Rough?

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About: Bausch Health Companies Inc. (BHC)
by: Adam Orr
Summary

Unbiased review of the pharmaceutical company BHC, as the once Valeant Pharmaceuticals' future hangs in the balance, as they reinvigorate the company into the newly branded Bausch Healthcare, Inc.

Identifying and weighing the pros and cons of the company - as the former $270/share stock tries to pay down debt, and make more recent $8/share lows simply memories of the past.

Recent news of changes in asset structure, deleveraging, and as of late, an undisclosed settlement BHC won in favor of a drug patent they own.

BHC has agreed to purchase a segment of Synergy assets for a recently court-approved $195mm, with breakdown of the specific asset(s) involved. An overall positive move as BHC rebuilds its portfolio.

Conclusion on BHC based on technical factors, recent M&A, and sector comparisons between the pharmaceutical/health sector - highlighting considerable areas in which I believe the company is undervalued and are being ignored.

Review:

Bausch Health Companies Inc. (NYSE:BHC) is a multi-sector conglomerate company in the interest of developing, manufacturing, and marketing a range of various industrial products. From pharmaceuticals, medical devices, and OTC products, to significant improvements in eye health, gastroenterology, and dermatology. The company has a current market cap of USD$8.20 billion, and is recovering from significant losses over the past 2-years, but doing an excellent job from my perspective. The company offers dermatology products that treat a range of conditions, including actinic keratosis, acne, atopic dermatitis, psoriasis, cold sores, athlete's foot, nail fungus, and other dermatoses, as well as provides aesthetic medical devices, which address various conditions, including facial wrinkles, acne, pigmentation conditions, body sculpting, skin tightening, and laser hair removal. It currently has negative earnings. The firm also develops and markets products that treat gastrointestinal and hematologic conditions comprising hepatic encephalopathy, irritable bowel syndrome with diarrhea, traveler's diarrhea, opioid-induced constipation, ulcerative colitis, and others.

Identifying Technical Factors:

The 50-day moving average is one of the most common technical indicators in which investors use to analyze price trends of pharmaceutical companies, such as BHC, Inc. Over the past 50 days, BHC has been hammered by an overall bearish market. But appears to be undervalued in some areas of technical analysis. 50-SMA is used by traders to gauge mid-term trends. BHC, Inc. price's current trend is considered to be deep-value, with an optimistic outlook both near-term and long-term. Currently the stock price is 2.01% above from 50-SMA. On the surface, it seems as though the higher/lower the 50-day moving average goes, the more bullish/bearish the market is. In practice, however, the reverse is true.

The 200-day moving average is a significant calculation of value regarding moving averages, perhaps the most important of them all. The price movement is above the 200-day moving average – trend is up and BHC stock is good on basis of this long-term indicator. Since there are so many eyes on the 200-day SMA of Bausch Health Companies Inc., many traders will place their orders around this key level. The moving average measures the sentiment of the market on a longer term basis.

With a 200-day simple moving average is one of the most important tools when trading. The simple reason, all traders are aware of the number of periods and actively watch this average on the price chart. The stock price is trading above than the 200-day moving average at the current moment. This is a notable positive signal for long-term investors. The stock price distance from 200-day SMA appears to be at 0.161%.

If you were to track the closing price and 52-week high of the company, the current price movement shows that the stock price positioned down when compared against the 52-week high. As close of recent trade, stock represents -17.33% move from 52-week high. Tracing the 52-week low position of the stock, we noted that the closing price represents a 57.27% higher distance from that low value. Technical analysts compare a stock’s current trading price to its 52-week range to get a broad sense of how the stock is doing, as well as how much the stock’s price has fluctuated. This information may indicate the potential future range of the stock and how volatile the shares are.

Bausch Health Companies Inc. moved with fall change of -0.17% at $23.52 during Thursday trading period. This stock price move and price percentage is noteworthy to traders as it shows final value of stock and how much it changed in recent trading session. There are 2667796 shares which are traded on hands in the recent trading session. It’s an average volume stands with 5006.96K shares. Take a review on its volatility measure, 3.77% volatility was seen in a month and for the week it was observed at 2.70%. It is trading at a P/S value of 1.0 and P/B registered at 3.11.

The stock revealed activity of -0.76% for the past five days. The monthly performance reflected change of -8.62% and indicated -6.96% performance in last quarter. As for a performance, the company’s showed return of 27.34% since start of the year. This YTD return is simply the amount of profit generated by an investment since the beginning of the current calendar year. YTD calculations are commonly used by investors and analysts in the assessment of portfolio performance because of their simplicity.

Synergy Asset Sale For Under Just Under $200mm To BHC:

Synergy, who one was a profitable mid-cap stock, with market caps pushing almost as high as USD $1.5 billion, has been court-approved to sell one of their top drugs - Trulance - and potentially, a colorectal drug for cancer prevention under the name of Dolcanatide to Bausch Health, Inc., pushing shares up +4.7% on the day's trading. The sale is rumored by various credible sources to have sold for an estimate of approximately $195 million.

It was not long that BHC was selling assets at fire sale prices in order to stay alive. The fact that BHC has acquired an asset that will work well with the current market strategy the company is attempting to recover from, and at such a price, seems to be an extremely great sign to be adding onto the books a low price asset that can help Bausch Health turn around and continue increasing profit & revenue over time, in which is can begin recovering to the levels of its once glory days.

Conclusion:

With an incredible save over the past 2 years, mainly in part to asset sales which have led to significant debt reduction, breaking headline news that the tables have turned and are now acquiring new compatible assets of their own - along with extremely undervalued technicals in comparison to sector averages - tells you this company is making all the right moves, and has the positive outlook one would be looking for in a solid investment. While I have a personal target based on chart analysis, Fibonacci ratios along with support/resistance levels, and factors discussed in this article ... I believe BHC to have a 3-5 Price Target of $72/share. Maybe not the once $270/share Bausch Health traded at, not much more than a year ago. But an estimated 308% R.O.I. over the next 12-18 months, would certainly be nothing to complain about. However, I am not speaking on behalf as a CFA, only an individual investor. And always ask my readers and followers to do their own due-diligence before acting on any information provided in this article.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.