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Rodman & Renshaw Is Still Buying Valeant; Default Risk Still Manageable?

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Rodman & Renshaw’s Raghuram Selvaraj maintained a Buy rating for Valeant Pharmaceuticals Intl Inc (NYSE: VRX), with a price target of $118.

Debt default is the most substantial risk that the company is facing. Analyst Raghuram Selvaraj pointed out, “It is important to note that Valeant has not missed any bond payments and that the primary rationale for an event of default is related to the covenants in Valeant's debt agreements that pertain to the filing of the firm's financial statements.”

Related Link: Valeant Just Received 2 More Downgrades

Valeant has not filed its 10-K, and needs to avoid default very quickly. Selvaraj believes that if Valeant can agree on a timeline with its creditors for the filing of its 2015 10- K and 1Q 2016 10-Q as well as file its financial statements accordingly, the near-term risk of default would be mitigated.

The analyst noted that creditors would not benefit by forcing the company into default. Therefore, they would be willing to strike a compromise if Valeant can demonstrate its ability to file the financial statements in the near term.

Other Analysts With Buy Ratings

In a report published on March 16, Stifel Nicolaus maintained a Buy rating for the company, with a price target of $65. On the same day, Jefferies issues a report maintaining a Buy rating and a price target of $53 for Valeant.

Latest Ratings for VRX

DateFirmActionFromTo
Dec 2016Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2016MizuhoDowngradesNeutralUnderperform
Nov 2016Morgan StanleyMaintainsOverweight

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: Raghuram Selvaraj Rodman & RenshawAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

 

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