Tuesday, April 11, 2006

Baush Bombs Again: Ummm, We Called It....

Bausch & Lomb (BOL) got another whooping in after-hours action Monday after it agreed to stop shipping its ReNu MoistureLoc brand contact lens solution because myriad users have reported getting an eye infection.

The FDA said over 100 preliminary reports of a fungal infection had been reported to 17 different CDC Prevention units. Although the FDA said it was not aware of a direct link between the Fusarium fungus and any specific product, in 26 cases thus far, patients used Bausch & Lomb's ReNu MoistureLoc solution.

The pause in shipments was another low blow for Bausch & Lomb, which said last month it was delaying issuing its 2005 annual report amid some accounting mishaps. When a company can't crank out its numbers in a timely fashion -- stay away.

The company's shares tapped a new 52-week low on Monday, even after a bullish story on the firm popped up in this past weekend's Barron's. Barron's was right in thinking that investors may be over-reacting to BOL's fungus-related woes, but they forgot to mention that the overall growth picture at BOL looks bleak.

Apparently Barron's doesn't pay attention to this site, because on March 1st -- with BOL trading at $69 -- we initiated coverage on the stock with a sell recommendation.

Shares are down over 30% since we first wrote pessimistically about the stock.

Editor's update: Reinforcing our long held belief that most analysts either don't know what they're doing or too reluctant to pull the trigger when it counts, BOL was downgraded by five different firms on Tuesday. Our bearish call 5 weeks ago would not be the first time we've blown a major analyst recommendation out of the water. Similarly, this wouldn't be the first time we've shown readers a 30% return in less than 6 weeks (our typical holding/shorting period). If you'd like to become part of our exclusive client list, you'd be nuts not to read this.

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