Jefferies Optimizes Valuation for Bausch + Lomb Corporation

Jefferies, a global financial services company, has indicated that Bausch + Lomb Corporation (NYSE:BLCO) is an undervalued asset, with a potential takeout price of $25 per share. This valuation is based on an updated leveraged buyout (LBO) model, which suggests that such a deal could yield an internal rate of return (IRR) of approximately 21% over a five-year period.

> "We have long viewed BLCO as an undervalued asset with a lot of potential that could be unlocked once a full spin/sell is finalized. BLCO fits well within both PE and strategics," analyst Young Li wrote in a note.

This comes amid speculation that Blackstone (NYSE:BX), one of the private equity firms previously interested in acquiring BLCO, might withdraw from the bidding process.

Jefferies' LBO analysis takes into account a 38% premium over BLCO's current share price, a leverage of six times post-takeout, and a compound annual growth rate (CAGR) of 12% for EBITDA over a five-year period.

The analysis also assumes an exit EBITDA multiple of 14 times, which is still below the multiples of comparable companies.

The potential sale of BLCO is seen as beneficial for all stakeholders, including equity and debt holders of both Bausch + Lomb and Bausch Health Companies (NYSE:BHC) Inc.

According to Jefferies, a transaction would release significant value that is currently perceived as trapped due to the overhang from the BHC spinoff, with BLCO trading at a 32% discount on its 2025 EBITDA compared to peers.

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