Valeant's Calls To Analysts 'Raise Disclosure Questions'
Following an extended sick-leave, Valeant Pharmaceuticals Intl Inc (NYSE: VRX)'s CEO Mike Pearson has returned to his station at the company's helm.
While a call to analysts was cancelled last week, Pearson personally made one-one-one calls to a few analysts, reaching out to those who, according to Bloomberg, had "been bullish on the embattled company."
The strategy apparently worked, at least in the short run, as the analysts who were personally contacted by Pearson reportedly spread the news that "Pearson was getting up to speed and taking care of business."
While the issue has jumped a significant 8 percent on Monday, Bloomberg painted a slightly less optimistic picture. "That chain of events troubles some investors, analysts and securities experts," Bloomberg began.
"Pearson, who returned to work vowing to set the right tone and champion transparency, had chosen to take his message not to the public, but first to handpicked analysts. The perception of selective disclosure is one he may wish to avoid as he races to shore up his firm and its image."
According to Piper Jaffray analyst David Amsellem regarding the issue, "For a company that is in enough hot water, I don't understand why he would do that,"
Was Something Material Disclosed?
Despite the jump in shares and the hand-picked one-on-one talks, there is no tangible proof that Pearson disclosed anything improper.
Bloomberg cited Lynn Turner, former SEC chief accountant, "The mere fact that Valeant's shares jumped after analysts began speaking about the Pearson chats isn't proof that the company may have shared material information […] Nor, Turner said, are the events on their face enough to spur a formal investigation."
However, Bloomberg was quick to note, "[T]he situation could prompt the U.S. regulator to do some preliminary fact-finding."
Turner responded, "I would want to see the notes. I'd want to talk to a couple of the analysts."
Another expert, MIT Sloan School of Management accounting professor, S.P. Kothari, provided his take on the situation, stating that even without traditional material information being disclosed, the one-on-one chats amid such volatility are justly debated.
As summarized by Bloomberg, Kothari's perspective is that those analysts who were offered the singled attention "were offered a rare early chance to take measures of the voice, tone and outlook of a CEO who spent two months completely out of public view."
At time of writing, Valeant was up 7.26 percent on the day at $65.76.
Latest Ratings for VRX
|Dec 2016||Morgan Stanley||Downgrades||Overweight||Equal-Weight|
|Nov 2016||Morgan Stanley||Maintains||Overweight|
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