5 Most Undervalued Pharma Stocks To Buy According To Hedge Funds

2. Bausch Health Companies Inc. (NYSE:BHC)

Number of Hedge Fund Holders: 44

P/E Ratio as of January 23: 11.01

Bausch Health Companies Inc. (NYSE:BHC) is a Canadian firm that  develops, manufactures, and markets a range of pharmaceutical, medical device, and over-the-counter products for eye health, gastroenterology, and dermatology. On November 17, Evercore ISI analyst Umer Raffat said the FDA issued new product specific guidance for generic Xifaxan, one of Bausch’s primary drugs, with the “key change” being that the new guidance no longer grants a waiver of in vivo testing for the 550 mg strength based on 200 mg testing. By doing this, the FDA added “an extra layer hurdle for generics to jump through,” according to the analyst, who noted that generic 550 mg “is really what matters” given that the 550 mg dose is “where 99% of the Xifaxan volume lies.” He maintained an In Line rating on Bausch Health Companies Inc. (NYSE:BHC). 

According to Insider Monkey’s data, 44 hedge funds were long Bausch Health Companies Inc. (NYSE:BHC) at the end of Q3 2022, compared to 39 funds in the last quarter. Carl Icahn’s Icahn Capital LP held the largest stake in the company, comprising 34.7 million shares worth $239.2 million. It is one of the most undervalued pharma stocks to buy according to hedge funds. 

Here is what Miller Value Partners Opportunity Trust Fund has to say about Bausch Health Companies Inc. (NYSE:BHC) in its Q2 2022 investor letter:

“Bausch Health Companies Inc. (NYSE:BHC) declined during the quarter as the company consummated its Bausch+Lomb IPO at valuations far below expectations, reported disappointing Q1 2022 results, and delayed its plan to spin out its Solta (aesthetics) business due to difficult market conditions. While the company spun off 10% of Bausch+Lomb (BCLO) they retained 90% of the company which they intend to distribute once they have met their target leverage ratio of 6.5-6.7x. The future spin-off value of the Bausch+Lomb piece represents a value of $12.55 per share, 39% above where Bausch Health is currently trading. The company recently appointed John Paulsen as Chair of the Board, which should accelerate value realization.”