Bausch + Lomb price reaction to recall ‘likely overdone,’ says RBC Capital

After Bausch + Lomb (BLCO) announced a voluntary recall of its enVista intraocular lenses, RBC Capital says talks with management indicated that it remains too early to determine the financial impact. However, the firm’s view is the event may lead to a charge in Q1 and a negative impact on surgery group operations until the products are returned to the market, based on similar recalls that have occurred at other companies. The current stock price decline of 6% reflects a market cap erosion of about $330M, which is higher than the $184M enterprise value that RBC ascribes to the entire surgical segment, notes the analyst, who views the stock price reaction as “likely overdone.” RBC has an Outperform rating and $18 price target on B+L shares.