Bausch + Lomb Surges 14.5%: Is This an Indication of Further Gains?

Bausch + Lomb BLCO shares ended the last trading session 14.5% higher at $17.80. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.8% loss over the past four weeks.

Bausch + Lomb scored a strong price increase on investors' optimism surrounding a Financial Times report stating that the company is contemplating a sale to address challenges related to its spin-off from the parent company Bausch Health. Private equity firms are likely to be among those interested in the deal, according to the report.

This company is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -27.3%. Revenues are expected to be $1.17 billion, up 15.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Bausch + Lomb, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BLCO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold).

Bausch + Lomb is a member of the Zacks Medical Services industry. One other stock in the same industry, Alignment Healthcare ALHC, finished the last trading session 3.2% lower at $11.51. ALHC has returned 36.7% over the past month.

Alignment Healthcare's consensus EPS estimate for the upcoming report has changed -7.8% over the past month to -$0.14. Compared to the company's year-ago EPS, this represents a change of +26.3%. Alignment Healthcare currently boasts a Zacks Rank of #3 (Hold).

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