Firms Bullish On Valeant Following Earnings, Acquisition

Monday saw many biotech firms surging, among them was Valeant Pharmaceuticals Intl Inc VRX after acquiring Salix Pharmaceuticals Ltd. SLXP. In Tuesday morning summaries, many firms lauded Valeant's earnings report.

Of the  different reasons for the increased price targets, there were several key words or phrases that were used in each report to signify the strength of Valeant going forward. The first notable reason was "organic growth" of 16 percent, which helped Valeant beat every Q4 guidance metric such as revenue, same-store sales and earnings per share, even factoring in a $0.09 loss to FX headwinds.

Stifel analyst Annabel Samimy predicts this double-digit growth will continue into 2015 Q1 around 10-15 percent. These figures were backed by Barclays' Douglas Tsao, stating, "Jublia, whose trajectory suggests significant upside to Street expectations, provided further evidence that VRX can continue to drive double-digit organic growth."

The next key factor contributing to Valeant's praise is the diversification of its products. Despite reaching outside its realm of expertise, Samimy respects Valeant for finding "mismanaged, accretive opportunities." Through strategic acquisition of Dendreon, Marathon Pharmaceuticals and Salix, Valeant was able to diversify its portfolio into GI and oncology brands. According to Tsao, gastrointestinal and oncological products are two of the more attractive therapeutic areas, and to expect Valeant to continue to add to its oncology portfolio.

Coinciding with these positive variables, many firms increased price targets for Valeant.

Barclays raised its price target from $198.75 to $220, reiterating an Overweight rating. Canaccord upped its price target from $183 to $230, keeping its Buy rating.

Stifel showed the largest increase from Valeant's initial price target, jumping from $175 to $230.

Shares of Valeant recently traded at $202.01, up 1.6 percent.