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Why Is Bausch (BHC) Up 8.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Bausch Health (BHC - Free Report) . Shares have added about 8.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bausch due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Bausch Beats on Q3 Earnings & Sales, Raises Guidance

Bausch Health Companies Inc’s earnings and sales beat estimates in the third quarter of 2019. Moreover, the company raised its annual sales guidance.

The company’s adjusted earnings per share of $1.19 easily beat the Zacks Consensus Estimate of $1.06 and increased from $1.15 reported in the year-ago quarter.

Total revenues of $2.2 billion comfortably beat the Zacks Consensus Estimate of $2.15 billion and increased 3% year over year.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment (comprised 53% of the total revenues) were $1.2 billion, up 2% year over year. Excluding the impact of discontinuations and divestitures, the segment organically improved approximately 5%, driven by growth in Global Consumer, International and Global Vision Care sales.

The Salix segment revenues rose 20% year over year to $551 million, primarily driven by 24% growth in Xifaxan.

The Ortho Dermatologics segment revenues were $147 million, down 16% year over year due to lower volumes resulting from the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by growth in the Global Solta business.

Diversified Products segment revenues were $336 million, down 5% from the year-ago quarter primarily due to the loss of exclusivity of certain products.

The company reduced debt by approximately $450 million in the third quarter of 2019.

Pipeline Update

The FDA accepted the New Drug Application for Arazlo (IDP-123) Lotion and granted a PDUFA action date of Dec 22, 2019.

2019 Guidance

For 2019, revenues are now expected between $8.475 billion and $8.625 billion (previous guidance was $8.40-$8.60 billion). The Zacks Consensus Estimate is $8.52 billion, down from the midpoint of $8.55 billion.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 7.61% due to these changes.

VGM Scores

At this time, Bausch has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Bausch has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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