Here's Why CRT Capital Boosted Its Price Target On Valeant Pharmaceuticals

In a report published Wednesday, CRT Capital analyst Tim Chiang increased his price target on Buy-rated shares of

to $220 from a previous $180 following Tuesday's conference call which highlighted strong fundamentals and the strategic rationale behind the acquisition of

and

"In addition to both deals adding new product segments to Valeant's top line (GI and Oncology) we believe these transactions play into Valeant's strengths in the integration arena focused on lowering costs and increasing profitability," Chiang wrote. Chiang added that in the case of Salix, Valeant intends to work down wholesaler inventory levels to two months or less by the end of the year. In the case of Dendreon, Valeant intends to increase gross margins to approximately 65 percent (from approximately 50 percent) by the end of 2015.