The market’s freefall in the last week led to the blatant of good companies. Bausch Health (NYSE:BHC) lost 16.5% last week while Teva Pharmaceuticals (NYSE:TEVA) also dropped. Both drug delivery firms now trade at similar valuations of a forward P/E of 4.4 times. This is too cheap for value investors to ignore.
Bausch posted organic revenue growth of 4% in FY2019. Ortho Dermatologics revenue fell 1% while its diversified products division reported a 5% drop in sales. But the overall revenue growth to $2.22 billion in Q4 suggests the company’s turnaround continues. The firm completed $2.25 billion in financing in the period and ended Q4 with $3.2 billion in cash.
Teva posted a strong quarterly report. It posted an EPS of 62 cents (non-GAAP) as revenue rose 1.1% to $4.47 billion. The debt levels are still at high levels but interest rates are not going up any time soon.
In fact, the U.S. Federal Reserve may coordinate a rate easing among central banks around the world. Even if it cuts or is prepared to cut rates, this will send bond yields lower. This only lowers the cost of Teva’s debt costs when it refinances.
Teva has Austedo and Ajovy products to drive sales. It also has generic antivirals that may help treat covid-19 patients.
