Amid the ongoing tough economic environment, IPOs seem to be at a halt since the beginning of 2022. Rising inflation, broad market volatility, the impact of Russia’s invasion into Ukraine, and a hawkish outlook for Federal Reserve policy tightening, are some of the issues lingering over individuals’ minds. They are skeptical about companies being profitable despite strong revenue prospects.
Per a Financial Times report, Rachel Gerring, head of EY’s Americas IPOs practice, said, investors will hunt for “larger companies, those with more certain results and growth plans, profitable companies…those are stronger organisations for this type of environment.”
According to Dealogic, U.S. IPOs posting a record year in 2021, seem weak this year-to-date. As of May 6, a mere 39 firms have gone public and raised a combined $4 billion, compared with 140 companies raising $56.6 billion in the same period the prior year.
On improving conditions, a strong pipeline of companies with robust fundamentals keen to go public might be expected.
Bausch + Lomb IPO
Late Thursday, eye-care company Bausch + Lomb Corporation (NYSE: BLCO) launched its IPO of 35 million shares, which was priced at $18 per share, below its expected range of $21 to $24. Shares rose more than 8% to close at $20 on Friday.
According to its website, Canada’s Bausch + Lomb, a leading supplier of contact lenses, provides “a comprehensive portfolio of more than 400 products spanning contact lenses, lens and eye care products, ophthalmic pharmaceuticals, over-the-counter products and ophthalmic surgical devices and instruments.”
In 2013, Bausch Health Companies Inc. (BHC) bought Bausch + Lomb for $8.7 billion, which was launched as an optical goods shop in 1853. Bausch + Lomb has also been listed on the Toronto Stock Exchange under the same ticker name.
Bausch + Lomb raised a total of $630 million, marking the second-largest IPO this year. Interestingly, private-equity firm TPG (TPG) raised $1 billion in the first IPO of the year this past January.
Bausch Health planned to spin off two of its companies by taking them public to reduce its $22.9 billion debt. The other company is Solta Medical, a skincare company, which has filed for an IPO but has not disclosed terms as of yet.
Per the prospectus filed by the company, instead of Bausch + Lomb, the parent company has offered stock in the IPO and will receive proceeds as well. Additionally, the stake of Bausch Health will be reduced to 88.5% on the underwriters’ exercise of the full over-allotment option. Morgan Stanley (MS) and Goldman Sachs (GS) served as the lead underwriters for the offering.
Official Comments
Joseph C. Papa, the Chairman and CEO of Bausch + Lomb, said, “Today marks a tremendous milestone for Bausch + Lomb and an important step forward on the path to an independent company focused on eye health.”
“Over the course of our company’s nearly two century long history, Bausch + Lomb has always stood at the forefront of cutting-edge scientific and technological optical advancements, and today is no different. We are more focused than ever on developing and offering new treatments to meet unmet eye health needs,” Papa added.
Wall Street’s Take
The Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on one Buy and two Holds. The average Bausch Health price target of $25.95 implies a 61.78% upside potential. Shares have lost 41.74% over the past year.
Discover new investment ideas with data you can trust
Read full Disclaimer & Disclosure