We feel now is a pretty good time to analyse Bausch Health Companies Inc.’s (NYSE:BHC) business as it appears the company may be on the cusp of a considerable accomplishment. Bausch Health Companies Inc. develops, manufactures, and markets a range of pharmaceutical, medical device, and over-the-counter (OTC) products primarily in the therapeutic areas of eye health, gastroenterology, and dermatology. The US$11b market-cap company announced a latest loss of US$560m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Bausch Health Companies will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Bausch Health Companies
Consensus from 13 of the American Pharmaceuticals analysts is that Bausch Health Companies is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$242m in 2022. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 58%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Bausch Health Companies’ growth isn’t the focus of this broad overview, though, keep in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Bausch Health Companies is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Bausch Health Companies, so if you are interested in understanding the company at a deeper level, take a look at Bausch Health Companies’ company page on Simply Wall St. We’ve also put together a list of essential aspects you should further examine:
- Valuation: What is Bausch Health Companies worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Bausch Health Companies is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Bausch Health Companies’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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