Bullish Mizuho Says Bausch Health's Long-Term Guidance 'Within Reach'

Bausch Health Companies Inc’s (NYSE: BHC) growth drivers will become “more tangible” in 2019, and shares could appreciate as the company continues to demonstrate good execution, according to Mizuho Securities.

The Analyst

Mizuho’s Irina Koffler maintained a Buy rating on Bausch Health Companies while raising the price target from $39 to $41.

The Thesis

The revenue forecast for 2019 has been raised by $133 million to around $8.39 billion, mainly to reflect strength in the company’s Salix subsidiary, Koffler said in a Monday note. 

The “significant seven,” or the Canadian drugmaker's seven drugs that have the potential to reach $1 billion in peak sales by 2023, should contribute $282 million to adjusted EBITDA in 2019, the analyst said. The company’s guidance reflects a $300-million contribution; the difference is mainly due to the Duobrii delay, she said. 

Duobrii could be approved soon and become the next catalyst for Bausch Health stock, Koffler said.

The drugmaker has guided to a revenue CAGR of 4-6 percent and an adjusted EBITDA CAGR of 5-8 percent for 2019-2022, according to Mizuho. 

This long-term guidance appears “directionally correct” and will be supported by the acquisition of Synergy Pharmaceuticals Inc (OTC: SGYPQ), the analyst said. 

“Most companies struggle to attain long-term guidance targets, but we believe that Bausch's 2019-2022 outlook is within reach.”

Price Action

Bausch Health Companies were trading up 1.96 percent to $24.45 at the time of publication Monday. 

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