Bausch & Lomb Earnings: Amid Tariff and Recall Concerns, Shares Sink on Shaky Start to 2025

Narrow-moat Bausch & Lomb's first-quarter results showed some resilience, including 3.5% revenue growth, but two major factors sank shares: a recall and potential tariff effects. Despite management raising revenue guidance by $50 million at the midpoint, it lowered its EBITDA outlook by $50 million, suggesting a 17.3% margin at the midpoint and a 120-basis-point reduction from the previous guidance. After updating our model for these trends and baking in a weaker US dollar versus the Canadian dollar, we have lowered our fair value estimate to CAD 24.50 ($17.50) per share from CAD 28.00 ($20). While we still view shares as moderately undervalued for the risk, the market reaction to today’s results signals the weakening level of conviction investors have in the name against a difficult macro environment, a high degree of uncertainty from tariffs, and the enVista recall potentially damaging the brand’s reputation in key markets.