Patience Is Key When it Comes to Bausch Health (BHC) Stock, Says Analyst


Stifel analyst Annabel Samimy says when it comes to Bausch Health (BHC) stock, patience pays. Recall the company entered a “stalking horse” agreement to acquire Synergy Pharmaceuticals (SGYP) when the company filed for bankruptcy. That includes the rights to Synergy’s IBS and constipation drug Trulance, dolcanatide and its intellectual property. Samimy says this potential takeover, while still subject to competitive bids, would fit well into BHC’s wheelhouse, leveraging the company’s sales and payer infrastructure as well as creating more physician relationships in the space.

The analyst believes this is the exact presence BHC needs to optimize/maximize sales of Trulance. As a result, the analyst maintained a Buy rating for the stock with a price target of $35. (To watch Samimy’s track record, click here)

“While we are not surprised to see an opportunistic move of this nature, that BHC is in a position to add strong assets into its portfolio is a clear sign of normalization of its business development activities,” Samimy says.

The analyst believes that though the next step in the process is an auction process, its likely BHC will be awarded the incentives and protections for being the first bidder, which would include expense reimbursements or breakup fees. The completion of the bidding process should be wrapped by the first quarter of the new year.

“We have had our eye on Synergy as a possible acquisition target and BHC’s patience brings the asset in at an attractive level,” the analyst explains. “While Linzess is the lead product in the CIC/ IBS-C, we have always felt that Trulance, if given the appropriate infrastructure support in GI and primary care, could prove a strong competitor in the constipation space. The indication is primarily served by Linzess and Amitiza, with Trulance as the newest entrant. We think that Synergy was never able to penetrate the market was more an indication of its platform rather than the product. The IBS-C market(currently ~$1bn) represents approximately one-third of the total IBS market, and we think it remains underpenetrated. (Trulance currently on a $45mn runrate.) BHC—with Xifaxan, Apriso/UC and Relistor/OIC—should be able to fold Trulance directly into its infrastructure and further give dolcanatide (Phase 2) for UC and OIC the appropriate R&D and regulatory support and later the correct infrastructure for commercialization.”

Only time will tell how the auctioning process will go. But for now, analysts are placing their bets. TipRanks analytics show out of 12 analysts who have been keeping an eye on BHC stock, 7 are bullish, 4 are sidelined and 1 is bearish. The consensus price target of $31.08 shows an upside of just about 36%. (See BHC’s price targets and analyst ratings on TipRanks)

 

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