What Happened?
Shares of eyecare company Bausch + Lomb (NYSE: BLCO) jumped 3.1% in the morning session after reports revealed an activist investor, Jana Partners, took a stake in competitor Cooper Companies and was pushing for a potential merger of Cooper's contact-lens business with Bausch + Lomb.
The news followed a report that Jana Partners had built a position in Cooper and planned to advocate for strategic changes, specifically a combination of Cooper's contact lens unit, CooperVision, with Bausch + Lomb. In a notable development, Bausch + Lomb's CEO, Brent Saunders, publicly expressed that he would be open to such a combination. He stated that a deal could create a stronger and more scaled competitor in the contact lens market. Investors reacted positively to the possibility of a merger, which could enhance market position and pricing power for the combined entity.
After the initial pop the shares cooled down to $15.39, up 2.5% from previous close.
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What Is The Market Telling Us
Bausch + Lomb’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 25 days ago when the stock dropped 3.4% on the news that the U.S. Commerce Department initiated a national security investigation into medical equipment and devices, raising concerns about potential tariffs.
The probe, conducted under Section 232 of the Trade Expansion Act, examines whether imports of items like syringes, infusion pumps, and surgical instruments pose a national security risk. Such investigations can pave the way for new import duties, creating a significant overhang for the sector. The goal of potential tariffs would be to boost domestic manufacturing by increasing the cost of foreign goods. This development has introduced new uncertainty for the industry, leading to broad-based declines in the stocks of major manufacturers, including Baxter International and GE HealthCare, as investors weigh the potential impact on supply chains and costs.
Bausch + Lomb is down 14.5% since the beginning of the year, and at $15.39 per share, it is trading 25.9% below its 52-week high of $20.76 from October 2024. Investors who bought $1,000 worth of Bausch + Lomb’s shares at the IPO in May 2022 would now be looking at an investment worth $769.55.
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