Why Does This Analyst Upgrade Bausch Health (BHC) Stock After Years of Distrust?

Bausch Health (BHC) is getting a bit of special treatment. Following a tough run of negative sentiment toward the company, Piper Jaffray analyst David Amsellem has upgraded his rating of the pharmaceutical company from Neutral to Overweight and upped the price target from $22 to $27, which implies nearly 20% upside from current levels. (To watch Amsellem’s track record, click here)

Amsellem commented, “We believe it is time to turn the page following a closer look at the business. Put another way, we believe this senior leadership team has positioned BHC not only for longer-term (LT) EBITDA stability, but potentially meaningful LT growth. Though it is not lost on us that BHC is still highly levered, a favorable maturity schedule gives BHC ample breathing room, and strong visibility into EBITDA stability/growth (something that cannot be said of other highly levered companies in the group) should enable the company to chip away significantly at debt levels in the coming years,” Amsellem explains.

“BHC in our view can be held up as unique among highly levered specialty pharma/generics companies (and therefore better positioned for LT multiple stability/expansion) for the following reasons: (1) we can confidently conclude that EBITDA has reached a trough and is positioned for LT stability and potentially meaningful growth […] (2) on a relative basis, asset quality for BHC these days is actually quite good (i.e. visibility on LT durability for top-seller Xifaxan along with a growing gastroenterology (GI) product footprint; and the most significant losses of exclusivities (LOE) are now in the rear-view mirror),” the analyst concludes.

The word on the Street rings largely bullish on this drug maker, backing Amsellem’s confident move, with TipRanks analytics demonstrating BHC as a Buy. Out of 12 analysts polled in the last 3 months, 8 are bullish on Bausch Health stock, 3 remain sidelined, and only 1 is bearish. With a return potential of nearly 40%, the stock’s consensus target price stands at $31.58. (See BHC’s price targets and analyst ratings on TipRanks)


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