Bausch + Lomb Stock Continues to Rise Following Jefferies' 'Undervalued Asset' Designation

Global financial services firm Jefferies has noted that Bausch + Lomb Corporation (NYSE:BLCO) is an undervalued asset, with a potential acquisition price of $25 per share. This valuation is based on an updated leveraged buyout (LBO) model, which forecasts an internal rate of return (IRR) of approximately 21% over a five-year period for such a deal.

Analyst Young Li stated in a note, "We have long viewed BLCO as a low-valued asset with significant potential that could be unlocked when a full separation/sale is completed. BLCO represents an attractive option for both private equity and strategic buyers."

This commentary comes amid speculation that one of the private equity firms previously interested in acquiring BLCO, Blackstone, may withdraw from the bidding process.

Jefferies' LBO analysis predicts a 38% premium over BLCO's current share price, a six times leverage post-acquisition, and a 12% compound annual growth rate (CAGR) in EBITDA over the five-year period. The analysis also assumes a 14 times exit EBITDA multiple, which remains below the multiples of comparable companies.

The potential sale of BLCO is seen as beneficial for all stakeholders, including equity and debt holders of both Bausch + Lomb and Bausch Health Companies Inc. According to Jefferies, a transaction would unlock significant value currently perceived as trapped due to the uncertainty arising from BHC's separation. BLCO is trading at a 32% discount compared to similar companies based on the projected 2025 EBITDA.