On Tuesday, RBC Capital Markets adjusted its outlook on Bausch & Lomb Corp. (NYSE:BLCO), increasing the price target from $20.00 to $23.00.
The firm has maintained an Outperform rating for the eye health company. The revision comes ahead of the company's third-quarter financial report, which is scheduled for release on October 30, before the market opens.
RBC Capital forecasts Bausch & Lomb's third-quarter revenue to reach approximately $1,181 million, slightly above the consensus estimate of $1,173 million. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to be around $219 million, which is just under the consensus estimate of approximately $222 million.
The analyst noted that the third-quarter performance is anticipated to continue to be affected by foreign exchange headwinds, estimated to impact the company by about $5 to $10 million. Despite these challenges, the operational focus for Bausch & Lomb is expected to be on their prescription drugs for dry eye disease (DED), specifically Miebo and Xiidra, as well as new product launches and monitoring any potential supply disruptions at its Florida facilities, which were recently threatened by hurricanes.
The increased price target to $23.00 reflects a scenario that includes a potential sale and the incorporation of updated multiples from comparable companies. This adjustment suggests a positive outlook on Bausch & Lomb's operational strategies and its ability to navigate market challenges effectively.
In other recent news, Bausch & Lomb Corp. reported a 20% constant currency revenue growth in the second quarter of 2024, prompting an upward revision of its full-year revenue forecast to between $4.7 billion and $4.8 billion. This growth was attributed to successful product launches, including the enVista NV intraocular lens and Bausch + Lomb INFUSE contact lenses.
In addition, the U.S. Food and Drug Administration has greenlit Bausch + Lomb's enVista Envy intraocular lens, with a broader release anticipated in 2025. This approval is a significant stride for the company, further strengthening its position in the eye health sector.
In terms of financial assessments, Evercore ISI upgraded Bausch & Lomb's stock rating from In Line to Outperform, raising its price target from $19.00 to $25.00. Stifel also increased Bausch & Lomb's price target to $19.00, maintaining a Hold rating, while Jefferies continued to endorse a Buy rating.
Moreover, private equity firms Blackstone (NYSE:BX) and TPG Capital are reportedly considering a joint bid for Bausch & Lomb. While other contenders have withdrawn, these two firms remain interested, potentially leading to a significant transaction. However, the possibility of a deal remains uncertain.
InvestingPro Insights
Bausch & Lomb Corp. (NYSE:BLCO) has shown strong performance recently, with InvestingPro data revealing a 19.54% price total return over the last three months and a significant 41.26% return over the past six months. This aligns with RBC Capital's optimistic outlook and increased price target.
InvestingPro Tips highlight that BLCO's net income is expected to grow this year, and analysts predict the company will be profitable. This positive forecast supports RBC Capital's Outperform rating and could be a factor in the raised price target.
The company's revenue growth of 15.14% over the last twelve months, as reported by InvestingPro, suggests a solid foundation for the upcoming Q3 earnings report. This growth trend aligns with RBC Capital's revenue forecast of $1,181 million, which is above consensus estimates.
It's worth noting that BLCO is trading near its 52-week high, with the current price at 95.34% of its 52-week peak. This information, combined with the strong recent returns, indicates investor confidence in the company's performance and potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for BLCO, providing a deeper understanding of the company's financial health and market position.
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