Some On Wall Street Still Back Valeant
Valeant Pharmaceuticals Intl Inc (NYSE: VRX) plunged 40 percent and touched a new 52-week low after the company reported a loss for its fourth quarter and slashed its outlook. The company cited incremental headwinds in Ophthalmology Rx, as well as the Commonwealth and Western Europe businesses.
Investors were surprised with the recent change in outlook, a significant revision from Valeant's mid-December guidance, which was reaffirmed in early January. Though the company said "we hope to beat this guidance in the quarters to come," the fact that outlook could change so meaningfully in a few months is not helping to rebuild investor confidence.
"The challenges of the past few months are not yet behind us," said CEO Michael Pearson said in a statement.
Despite all these doldrums, some Wall Street analysts still back the embattled Canadian pharma company.
UBS Still Bullish
UBS analyst Marc Goodman said the good news is that the implied first quarter revenues guidance of $2.9 billion - $3.0 billion (implying a run rate of about $12 billion in 2017 vs. UBS's of $12.8 billion), seems to indicate alleviation of a lot of the pressures in the business as Valeant moves into next year. It appears that management is taking the opportunity to reset expectations significantly.
Goodman has a Buy rating and $213 price target on Valeant.
What Stifel's Saying
Stifel analyst Annabel Samimy said: "We think today's results and guidance reflects VRX's effort to adjust to a new distribution structure quickly to bring the business back to normalcy to drive volumes and organic growth and demonstrate the power of its diversified platform."
Stifel has a Buy rating on Valeant with a price target of $200.
Canaccord: Near-Term Uncertainty Behind Valeant
Neil Maruoka of Canaccord Genuity noted that with the revised numbers, some near-term uncertainty is now behind Valeant. The analyst said Xifaxan will be the engine of growth.
"There will be more optimism in 2H2016 as the company aims to focus on volume growth instead of price; TRx trend of major products has not been affected despite cutting ties with Philidor," Maruoka wrote in a note to clients.
Canaccord Genuity rates Valeant at Hold with a price target of $75.
JPMorgan's Key Question
JPMorgan, who has an Overweight rating on Valeant, said the key question will be the ultimate achievability of these reduced expectations as well as Valeant's path forward to stabilize its business.
"It remains to be seen to what extent guidance reflect conservatism on the behalf of management in light of recent stock dynamics vs. deteriorating fundamentals in the underlying business," analyst Chris Schott said.
BMO: Recovery May Take Longer Than Expected
BMO's Alex Arfaei, who has a Market Perform rating and $133 price target on Valeant shares, said: "Overall, based on these results Valeant's recovery may take longer than expected, and as such we remain on the sidelines."
Latest Ratings for VRX
|Sep 2016||Deutsche Bank||Initiates Coverage on||Hold|
|Aug 2016||Morgan Stanley||Upgrades||Equal-Weight||Overweight|
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