What happened
Bausch Health Companies (BHC -2.75%) was a very healthy stock Wednesday. A bullish note from an analyst at an influential bank put some real zip in the shares, and they closed the day more than 8% higher.
So what
Analyst Chris Schott from JPMorgan Chase's J.P. Morgan pointed out in his note that a sum-of-the-parts calculation indicates to him that Bausch stock could be worth around $40 (although he's maintaining his $38 price target). That $40 is more than 50% above Monday's $26.10 closing price.
The prognosticator is also maintaining his overweight (buy) recommendation on the stock.
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Much of Schott's estimate consists of the Bausch & Lomb eye care division, which he is assuming contributes $30 to that total. He values the Solta dermatology-device unit at $7 per share, with the company's pharmaceutical operations making up the remainder.
As such, Bausch presents in his view an "attractive valuation argument" at a "fairly near-term time horizon over which this value could be realized." In other words, it's a buy on share price weakness that could see plenty of upside before long.
Now what
Bausch hasn't been a popular stock lately. Many investors clearly don't feel a looming split of the company into two component parts will improve either business.
Meanwhile, Bausch's recent quarterly earnings reports have been disappointing, with a revenue-guidance chop in the most recent one, and a top-line miss in its predecessor. It remains to be seen whether Schott's new note will continue to bring the bulls back to the stock.
