Valeant Perception Has Turned Corner, Stifel Analysts Say

Stifel’s Annabel Samimy reminded investors that Valeant Pharmaceuticals Intl Inc’s VRX various franchises had meaningful brand value, while there was steady demand for its key products.

The analyst maintained a Buy rating on Valeant Pharma, with a price target of $65.

Turning A Corner

“After reaching “crisis of confidence” levels following 4Q15 earnings, developments of the last several days seem to indicate that VRX is turning a corner,” Samimy stated.

The key risk factors that had been alleviated included the internal ad hoc review failing to find any further accounting misstatements, the company being committed to filing its 10-K by April 29 and creditors and bondholders agreeing to “extend or waive technical covenants related to reporting deadlines.”

Samimy believes that given that Valeant Pharma has sufficient liquidity to meet its debt obligations without the need for forced asset sales, the stock was unlikely to trade at distressed levels.

Catalysts Ahead

The analyst also believes that future developments would prove to be incremental catalysts for Valeant Pharma, following the completion of the internal ad hoc review.

These catalysts include “1) completion of external auditors review and filing of 10-K and 2) identification of new CEO to ensure the company remains on a viable strategic path,” Samimy mentioned.

However, the company still needs to go through federal inquiries and Congressional hearings regarding its business practices and pricing policies, which could prove to remain an overhang.