Bausch + Lomb Corporation (BLCO) stock rose early in Thursday's session following reports of private equity interest but has since pared some of its gains.
The stock opened at $20.47 before retracing and is now up 0.5% at $20.10.
Reports indicate that several private equity firms, including Blackstone, Advent International, and TPG Capital, are evaluating bids for the company, sparking significant investor interest.
Analysts at Jefferies noted that BLCO has always been considered an undervalued asset, with the potential to unlock more value since its spin-off from Bausch Health (BHC).
The firm highlights that a potential leveraged buyout (LBO) could lead to a $25 per share takeout price, estimating an internal rate of return (IRR) of 21% over five years for a private equity buyer.
Furthermore, Jefferies believes that BLCO's strong product pipeline, including new approvals and acquisitions, makes it a valuable asset for both private equity and strategic buyers.
Bank of America also acknowledged the private equity interest but moved to "No Rating" for BLCO, noting that the stock is no longer trading on fundamentals.
The firm referenced a Financial Times report indicating that preliminary bids could come by Friday, with potential for exclusive talks by October. BLCO shares have already seen a 29% increase this week.
Analysts at Wells Fargo see further upside for BLCO, pointing out that the stock is trading at a discount to peers such as Alcon (ALC) and Cooper Companies (COO).
The bank estimates that a 30% premium deal could result in a $23.91 per share price, with potential value for private equity buyers reaching as high as $28.29 per share if operational performance improves post-acquisition.