Bausch + Lomb's FDA-Approved Lens Sparks Rally, But is it a Bargain?

Bausch + Lomb's stock has rallied 4.1% in the past week, driven by news of a new FDA-approved lens technology. The company's share price remains down 12.5% for the year, but it earns a value score of 5 out of 6 based on key metrics. Analysts expect significant improvement in Free Cash Flow, rising from -$97.38 million to $851 million by 2029.

Bausch + Lomb's stock has rallied 4.1% in the past week, driven by news of a new FDA-approved lens technology. The company's share price remains down 12.5% for the year, but it earns a value score of 5 out of 6 based on key metrics. Analysts expect significant improvement in Free Cash Flow, rising from -$97.38 million to $851 million by 2029.

Meanwhile, activist investor Jana Partners has taken a stake in Cooper Companies and is pushing for strategic alternatives, including a potential merger with Bausch + Lomb. According to people familiar with the matter, Jana Partners is seeking to unlock shareholder value by improving capital allocation and enhancing returns, as reported by the Wall Street Journal. Bausch + Lomb CEO Brent Saunders has already expressed openness to the idea, stating that a merger would create a stronger competitor in the global contact-lens market, as an inkl article reports.

Cooper Companies, valued at around $14 billion, has seen its shares fall more than 20% this year. The company's contact-lens division, CooperVision, and women's health division, CooperSurgical, have failed to deliver meaningful shareholder gains, according to the Wall Street Journal. The activist investor contends that the combination of these two business areas has resulted in operational inefficiencies and limited shareholder returns.

The potential merger between CooperVision and Bausch + Lomb could appeal strongly to investors by creating scale and improving competitive positioning in a market dominated by large players. Bausch + Lomb, with a market capitalization of roughly $5.3 billion, was previously spun off from a larger health conglomerate under Saunders' leadership. The company competes alongside Cooper, Johnson & Johnson (NYSE:JNJ), and Switzerland-based Alcon Plc (NYSE:ALC) in the contact-lens segment, as reported by inkl.

The merger idea comes at a time when the vision care devices market is expected to grow significantly. According to DataM Intelligence's market forecast, the market is anticipated to rise at a considerable rate during the forecast period, between 2025 and 2032. In 2024, the market is growing at a steady rate, and with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon