Bausch + Lomb (BLCO) shares closed the last trading session with a remarkable 14.5% surge, settling at $17.80. This significant jump came on the back of heavy trading volume, surpassing the average number of shares changing hands in a typical session. This performance stands in contrast to the stock’s 2.8% decline over the past four weeks.
The surge in Bausch + Lomb’s stock price can be attributed to investor optimism fueled by a report from the Financial Times, suggesting the company is exploring a potential sale. The report indicates that the company is seeking a buyer to address the challenges stemming from its spin-off from parent company Bausch Health. Private equity firms are considered likely contenders for the deal.
While the news surrounding a potential sale has ignited enthusiasm, it’s important to consider the broader financial picture. Bausch + Lomb is expected to report quarterly earnings of $0.16 per share in the upcoming earnings announcement, representing a year-over-year decrease of -27.3%. Revenue is projected to reach $1.17 billion, marking a 15.8% increase compared to the same period last year.
While earnings and revenue growth expectations offer insight into a stock’s potential strength, empirical research underscores the strong correlation between trends in earnings estimate revisions and near-term stock price movements. Notably, the consensus EPS estimate for Bausch + Lomb’s upcoming quarter has remained unchanged over the past 30 days. This lack of change in earnings estimates raises concerns about the sustainability of the recent price jump.
As investors, it’s crucial to monitor BLCO’s performance going forward to determine whether the recent rally can translate into sustained strength. Currently, the stock carries a Zacks Rank #3 (Hold).
In the same Zacks Medical Services industry, another company, Alignment Healthcare (ALHC), ended the last trading session 3.2% lower at $11.51. ALHC has delivered a 36.7% return over the past month. However, the consensus EPS estimate for Alignment Healthcare’s upcoming report has declined by -7.8% over the past month to -$0.14, representing a year-over-year change of +26.3%. Alignment Healthcare currently holds a Zacks Rank of #3 (Hold).
