Bausch Stock Pops After "Significant Seven" Drug Drops

The firm expects the psoriasis lotion to be a key sales driver

Deputy Editor
Jun 25, 2019 at 9:28 AM
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The Canada-based pharmaceutical concern Bausch Health Companies Inc (NYSE:BHC) just announced this morning the launch of its new plaque psoriasis treatment, Duobrii. The lotion will be commercially available this week and the firm said it expects the drug to be an important revenue driver, dubbing it part of its "Significant Seven" -- a collection of products that could garner a predicted $1 billion in sales through 2024. In response, the shares have popped 1.9% to $24.21 in electronic trading.  

After hitting a five-month low of $20.27 earlier this month, BHC shares staged an impressive rally -- up roughly 26% -- before running out of steam at the $24.50 region. Fortunately, an recent area of support at the 50-day moving average just formed on the charts, and now the equity is trading right back beneath this two-week peak. Plus, the stock boasts a 31% year-to-date gain. 

Potential upgrades could help push the security higher too. While eight of the analysts in coverage call BHC a "buy" or better, five have doled out a "hold" or worse recommendation. The $30.93 consensus 12-month target price, however, represents a region the stock hasn't traded near since 2016, and holds a 30.2% premium to last night's close. 

Options bears have been paying attention to BHC lately. The equity sports a 10-day put/call volume ratio of 0.52 on the the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 73rd percentile of its annual range. This suggests a healthier appetite for puts over calls of late.

On the other hand, Bausch's Schaeffer's put/call open interest ratio (SOIR) of 0.46 is higher than just 15% of reading from the past year, indicating that short-term options players have rarely been more call-heavy during the past 12 months. 

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