On Monday, Piper Sandler adjusted its outlook on Bausch Health (TSX:BHC) Companies (NYSE:NYSE:BHC), raising the price target to $9.00 from the previous $7.00. The firm maintained a Neutral rating on the stock.
The increase in the price target is attributed to a forward-looking evaluation of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA). The valuation is based on an 8x multiple of the projected 2025 Pharma EBITDA, which Piper Sandler estimates at $2,446 million, a slight decrease from the prior estimate of $2,487 million. This projection reflects a static enterprise value to EBITDA (EV/EBITDA) multiple.
The analyst noted the decision to roll forward the EBITDA year utilized in the price target calculation from 2023 to 2025. This adjustment allows for a more current assessment of the company's financial outlook, taking into consideration its future earnings potential.
In the evaluation, a discount rate of 12% is applied for one year. This rate is used to adjust the future EBITDA estimate to its present value, providing a basis for the new price target.
The revised price target of $9.00 reflects Piper Sandler's updated analysis and expectations for Bausch Health's performance in the coming years. Despite the raised target, the firm's neutral stance suggests a cautious view on the stock's potential for appreciation.
InvestingPro Insights
According to recent InvestingPro data, Bausch Health Companies (NYSE:BHC) presents a mixed financial picture. With a market capitalization of $3.19 billion and a notable revenue growth of 7.79% over the last twelve months as of Q4 2023, the company shows signs of expansion. The revenue growth is even more pronounced when looking at the quarterly figure, with a 9.8% increase in Q4 2023. This aligns with Piper Sandler's assessment of the company's future earnings potential.
InvestingPro Tips suggest that Bausch Health's net income is expected to grow this year, which may be a factor in the raised price target by Piper Sandler. Additionally, the valuation implies a strong free cash flow yield, which can be attractive to investors looking for companies with the potential to generate cash. It's important to note that while the stock has experienced a large price uptick over the last six months, with a total return of 32.57%, it has fared poorly over the last month with a -17.91% return. These insights could be crucial for investors considering Bausch Health's stock.
For those seeking a deeper analysis, InvestingPro offers additional tips on Bausch Health's financial health and future prospects. By using the coupon code PRONEWS24, investors can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to comprehensive financial data and expert analysis.
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