In his second "Executive Decision" segment of his popular Mad Money program Thursday night, Jim Cramer sat down with Joe Papa, chairman and CEO of Bausch Health Cos. (BHC) , which just reported a 17-cents-a-share earnings beat that included 5% organic growth. (BHC was formerly Valeant Pharmaceuticals before July 2018.)
Papa started off by stating that it's the first anniversary of Lumify, BHC's newest treatment for red eyes, and already the product is among the most recommended by doctors and is selling at a $50 million annual run rate. There are other products in the pipeline.
Papa noted that BHC's strength comes from its diversification. The company operates in over 100 countries around the globe and makes medical devices, contact lenses, surgical products, prescription drugs and consumer products. Shares of BHC are up 41% for the year, but we need to be forward looking and check out the charts too.
In this daily bar chart of BHC, below, we can see a very choppy or let's call it an erratic sideways trading pattern. If you were lucky or smart enough to buy the sharp decline in December you are up on the year.
Prices are currently above the slightly rising 50-day and 200-day moving averages but moving averages have not been a successful approach to trading the past 12 months.
The daily On-Balance-Volume (OBV) line also shows a choppy up and down neutral trend.
And the Moving Average Convergence Divergence (MACD) oscillator has hugged the zero line for much of the year.
In this three-year weekly bar chart of BHC, below, we used a log scale to better show the price movement. Prices are barely above the flat 40-week moving average line.
The weekly OBV line has no features and the MACD oscillator shows no trend strength.
The old saying on the Street is that volume precedes price and this chart is not showing any volume the past year or two.
In this Point and Figure chart of BHC, below, we ignore volume and time and indicators. The chart shows an upside price target of $31.13 which would normally be a potential long-term breakout but our other charts do not support that idea.
Bottom line strategy: While the fundamental story may be promising I do not currently find a bullish story in the charts. I would look for trading opportunities elsewhere. If prices do break out on the upside we can revisit this stock.