Shares of Bausch Health Companies /zigman2/quotes/207248436/composite BHC -1.15% gained 1.6% in premarket trading as J.P. Morgan analysts upgraded the stock Wednesday morning to neutral from overweight, saying that "fundamentals for Bausch [are] looking increasingly solid." They said that the company is well-positioned for future growth and is moving past its legacy issues, which had included kickback convictions for former executives from Bausch (then called Valeant) and its pharmacy partner Philidor and allegations of price gouging. Going forward, J.P. Morgan analysts say that there may be additional value for Bausch to separate its eye-care business, which makes up 55% of its revenue. The company's lack of participation in the generics and the opioid markets are now considered positive, as generic drugs face price erosion and many opioid makers are fighting legal battles. "We see BHC's business as fundamentally better-positioned than specialty pharma peers," they wrote. Bausch's stock is up 58.8% year-to-date, compared to the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.20% , which has gained 25%.
An earlier version of this report had reversed the ratings change. It has been corrected.