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BHC or TEVA: Who Is Expected to Report Faster EPS Growth?

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Earnings guidance for fiscal 2019

In its fourth-quarter earnings conference call, Bausch Health Companies (BHC) guided for fiscal 2019 non-GAAP adjusted EBITDA of $3.35 billion to $3.50 billion, which implies YoY organic growth of -2% to 2%. The company is assuming $40 million or a 10% YoY hike in R&D (research and development) expenses as well as a rise in marketing and other commercial expenses in fiscal 2019.

According to the company’s fourth-quarter earnings investor presentation, Teva Pharmaceutical (TEVA) expects its non-GAAP EPS, EBITDA, and operating income to fall in the range of $2.20–$2.50, $4.4 billion–$4.8 billion, and $3.8 billion–$4.2 billion, respectively, in fiscal 2019. The company has also forecasted a negative impact of $100 million on its fiscal 2019 operating profit attributable to foreign exchange.

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Wall Street’s projections

Wall Street analysts have projected Bausch Health Companies’ adjusted EPS to be $3.87, $4.28, and $4.79, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively, which implies a YoY change of -2.50%, 10.55%, and 11.83% for fiscal 2019, fiscal 2020, and fiscal 2021, respectively. Wall Street analysts have also projected Bausch Health Companies’ gross margins to be 71.85%, 71.88%, and 72.03%, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

On the other hand, Wall Street analysts have projected Teva Pharmaceutical’s adjusted EPS to be $2.39, $2.65, and $2.86, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively, which implies a YoY change of -18.30%, 11.16%, and 7.75% for fiscal 2019, fiscal 2020, and fiscal 2021, respectively. Wall Street analysts have also projected Teva Pharmaceutical’s gross margins to be 50.12%, 50.83%, and 51.63%, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

Bausch Health Companies is expected to report higher absolute EPS, YoY EPS growth, as well as gross margins from fiscal 2019 to fiscal 2021 as compared to Teva Pharmaceutical.

Next, we’ll discuss expense projections for Bausch Health Companies and Teva Pharmaceutical in fiscal 2019. 

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