Bausch + Lomb (BLCO): Is the Current Valuation a Compelling Entry Point for Long-Term Investors?

Bausch + Lomb (NYSE: BLCO) has navigated a complex landscape in 2025, marked by mixed earnings performance, valuation discounts, and a challenging debt profile. For long-term investors, the question remains: does the current valuation represent a compelling entry point, or are the risks of underperformance too significant to justify exposure?

Earnings Performance and Revenue Resilience

Bausch + Lomb's Q3 2025 results, reported on October 29, 2025, demonstrated modest resilience. The company exceeded adjusted earnings estimates with $0.17 per share, a 6.25% surprise, and revenue of $1.2 billion, surpassing forecasts by 2.54% in its Q3 earnings report. While these figures reflect year-over-year revenue growth from $1.01 billion in Q3 2024, the earnings decline from $0.22 per share in the prior-year period underscores ongoing profitability challenges noted in the earnings report.

The company's Q2 2025 results, announced on July 30, 2025, were more encouraging. Earnings per share (EPS) of $0.07 beat estimates by 16.67%, and revenue of $1.29 billion exceeded forecasts in the company's second-quarter 2025 results. This performance prompted a raised full-year revenue guidance of $5.05–$5.15 billion, reflecting 5–7% constant currency growth. Notably, the Vision Care segment drove much of this growth, with strong sales of contact lenses and dry eye products like LUMIFY and ARTELAC, as described in that release.

However, post-earnings share price movements have been inconsistent. Despite Q2's positive results, the stock fell 4.91% in pre-market trading before recovering slightly, according to the company release. As of October 10, 2025, BLCO closed at $14.53, down 5.2% month-to-date and 18.3% year-to-date in the BLCO stock overview. This volatility contrasts with the company's historical ability to exceed revenue estimates, such as the $1.28 billion reported in Q4 2024 versus the projected $1.26 billion noted on that overview.

Historical backtesting from 2022 to 2025 reveals that while BLCO's stock often sees a short-term positive reaction to earnings beats, the average 30-day return turns decisively negative by day 30, with a typical decline of approximately -6.5%. This pattern suggests that even when the company exceeds expectations, the long-term performance of a simple buy-and-hold strategy following such events has historically underperformed the broader market.

Valuation Metrics: Discounted but Cautious Optimism

BLCO's valuation appears attractively discounted relative to industry benchmarks. Its price-to-sales (P/S) ratio of 1.06x is significantly lower than the industry average of 2.93x and the peer average of 2.39x, according to BLCO's statistics and valuation. Additionally, the company's enterprise value (EV) of $9.76 billion is supported by $4.89 billion in annual revenue, yielding an EV/sales ratio of 2.00. These metrics suggest the stock is undervalued, particularly when compared to its peers.

However, profitability remains a concern. BLCO reported a net loss of -$273 million over the past 12 months, with a negative return on equity (ROE) of -4.02% and a low ROA of 0.47%, as shown in the statistics and valuation data. The company's debt burden further complicates its valuation: a debt-to-equity ratio of 0.76 and a debt-to-EBITDA ratio of 8.46 highlight its reliance on leverage. While a forward P/E ratio of 17.96 implies optimism about future earnings, this metric is based on projected improvements that have yet to materialize.

A discounted cash flow (DCF) model suggests an intrinsic value of $39.00 per share, implying BLCO trades 62.3% below its theoretical fair value - a stark discount that, alongside the company's public disclosures, raises questions about near-term execution risks. The Zacks Rank #4 (Sell) rating further signals caution based on recent earnings estimate revisions. Yet, the stock's 12-month price target of $15.91 from analysts-11.1% above the October 10 closing price-indicates cautious optimism about its potential to stabilize.

Analyst Outlook and Long-Term Catalysts

Analysts have assigned BLCO a "Hold" consensus rating, with three buy ratings, seven holds, and one sell rating, as reflected in the stock overview. The average price target of $15.56–$15.91 suggests a modest upside, though this falls far short of the CEO's ambitious $39.06 per share target by February 2029 mentioned in the Q3 commentary. This long-term goal, tied to executive compensation, could serve as a tailwind if the company successfully executes its strategic initiatives, such as expanding its dry eye portfolio and contact lens innovations.

The company's recent Investor Day event, scheduled for November 13, 2025, may provide further clarity on its roadmap for growth, per the stock overview. For long-term investors, the key will be whether BLCO can leverage its strong revenue performance-driven by brands like Daily SiHy and Biotrue ONEday-into sustainable profitability.

Risks and Considerations

BLCO's valuation attractiveness must be weighed against several risks. First, its high debt load and negative ROE suggest operational inefficiencies that could persist. Second, the Zacks Rank #4 (Sell) rating, based on deteriorating earnings estimate revisions, signals potential underperformance relative to the market as noted in the Q3 commentary. Third, the stock's year-to-date decline of 25.10% as of October 10, 2025, reflects investor skepticism about its ability to reverse its earnings trajectory, which is evident in the stock overview.

Conclusion: A High-Risk, High-Reward Proposition

For long-term investors with a multi-year horizon, BLCO's valuation metrics and revenue resilience present a compelling case. The stock's P/S discount, combined with its history of beating revenue estimates, suggests undervaluation. However, the company's profitability challenges, debt burden, and mixed analyst sentiment necessitate caution.

If BLCO can execute on its strategic priorities-particularly in its Vision Care and Surgical segments-and demonstrate consistent earnings growth, the current price could represent a buying opportunity. Conversely, investors should remain vigilant about near-term risks, including debt servicing pressures and the likelihood of continued volatility. As the company approaches its November 2025 Investor Day and Q3 2025 earnings follow-through, further clarity on its path to profitability will be critical for assessing its long-term potential.