Bausch + Lomb (NYSE:BLCO) has seen its stock performance draw attention recently, especially as investors consider the company’s strategy and growth in the broader healthcare sector. The past month has brought steady upward movement for BLCO shares.
Bausch + Lomb’s share price momentum has picked up notably, with a 10.81% gain over the past week and an 11.34% rise in the last 90 days. These increases have helped to offset a tough start to the year. However, longer-term total shareholder return remains negative at -18.88% over one year, so sentiment is still recovering. The recent uptick suggests investors are beginning to revisit the company’s outlook as growth prospects and risks are reassessed.
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With recent gains and renewed investor interest, the big question is whether Bausch + Lomb’s share price still offers upside. Alternatively, have expectations for future growth already been reflected in the current price? Is there value left for buyers?
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Price-to-Sales Ratio of 1.2x: Is it justified?
Bausch + Lomb’s shares are currently trading at a price-to-sales (P/S) ratio of 1.2x, positioning the stock as undervalued relative to both its direct peers and the broader US Medical Equipment industry. Considering the last close price of $16.20, the market appears to be pricing the company well below the averages seen across the sector.
The price-to-sales ratio measures how much investors are willing to pay for each dollar of the company's revenue. For medical device makers like BLCO, this metric is especially relevant as it helps to gauge the market’s expectations for future revenue growth and operating scale, even when profits are negative.
BLCO’s P/S ratio is far below the US Medical Equipment industry average of 3.4x, and it is also lower than the average for its peer group, which sits at 2.6x. In addition, this is well below our modeled Fair Price-to-Sales Ratio of 2.4x, indicating that there could be meaningful price appreciation if market perceptions shift toward this level.
Result: Price-to-Sales Ratio of 1.2x (UNDERVALUED)
However, persistent negative net income and slow revenue growth continue to pose risks that could limit Bausch + Lomb’s ability to sustain this recent momentum.
Another View: Discounted Cash Flow Tells a Different Story
Looking at valuation from another angle, our DCF model paints an even more dramatic picture. The shares are trading 54% below what the SWS DCF model estimates as their fair value. This indicates a much higher potential upside than what using sales multiples alone might suggest. Could the market be overlooking something important?
If you’d rather dig into the numbers on your own or have a different take on Bausch + Lomb’s outlook, it’s easy to craft your own perspective in moments. Do it your way.
A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Bausch + Lomb.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Valuation is complex, but we're here to simplify it.
Discover if Bausch + Lomb might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Operates as an eye health company in the United States, Puerto Rico, China, France, Japan, Germany, the United Kingdom, Canada, Russia, Spain, Italy, Mexico, Poland, and internationally.
