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Why Is Bausch (BHC) Up 8.3% Since Last Earnings Report?

Zacks Equity Research
Universal Electronics (UEIC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

It has been about a month since the last earnings report for Bausch Health (BHC). Shares have added about 8.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Bausch Q4 Earnings Beat Estimates, Revenues Down Y/Y

Bausch reported better-than-expected results for the fourth quarter of 2018. The company’s adjusted earnings per share of $1.05 beat the Zacks Consensus Estimate of $0.88 but was down from $1.98 reported in the year-ago quarter.

Total revenues of $2.12 billion also exceeded the Zacks Consensus Estimate of $2.09, but was down 2% from the year-ago quarter’s figure.

Quarter in Detail

Revenues in the Bausch + Lomb / International segment were $1.2 billion, approximately flat with the year-ago quarter’s figure, primarily due to divestitures and discontinuations. Excluding the impact of discontinuations and divestitures, the Bausch + Lomb/International segment organically improved approximately 5%. The increase was primarily due to higher volumes despite a planned channel inventory reduction of $10 million in the Global Ophtho Rx business.

Salix segment revenues came in at $426 million, roughly flat year over year as 12% growth in Xifaxan was offset by a planned channel inventory reduction of $47 million and generic competition following the loss of exclusivity for Uceris.

Ortho Dermatologics segment revenues were $165 million, down 2% year over year due to lower volumes. This was partially offset by 32% revenue growth in the Global Solta business.

Diversified Products segment revenues were $325 million, down 11% from the year-ago quarter, primarily due to the impact of divestitures and discontinuations.

2018 Results

Revenues came in at $8.4 million, which was down 4% from 2017 but surpassed the Zacks Consensus Estimate of $8.34 billion. Earnings of $4.01 also beat the Zacks Consensus Estimate of $3.81.

2019 Guidance

Revenues are expected between $8.30 billion and $8.50 billion.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 6.59% due to these changes.

VGM Scores

Currently, Bausch has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.



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