On April 25, Valeant Pharmaceuticals Intl Inc VRX announced that the former CEO of Perrigo Company plc Ordinary Shares PRGO, Joseph Papa, would replace the outgoing Mike Pearson as chairman and CEO.
Rodman & Renshaw’s Raghuram Selvaraju reiterated a Buy rating on Valeant Pharma, with a price target of $105.
Papa Takes Over
The company expects Papa to take over as chairman and CEO in early May 2016.
Selvaraju mentioned that Papa was a good choice, given his long track-record in the pharma sector, wide experience in the management of diversified businesses and multiple product lines, as well as robust relationships with reimbursement agencies and pharmacy benefit managers.
“From our perspective, Mr. Papa could potentially reinvent the corporate culture at Valeant and turn the struggling company around,” the analyst stated.
A Positive Change
Selvaraju also pointed out that Valeant Pharma possessed a portfolio of attractively positioned business units and products, and with expectations having been meaningfully reduced for the company through the past several months, the bar has been set very low for Papa.
Selvaraju also believes that the incoming CEO “possesses significantly better public relations skills than Mr. Pearson, whose communications with the public had historically been something of an Achilles heel for Valeant.”
Therefore, Papa taking over the reins was likely to bring about a sea change at the company that had the potential to drive meaningful shareholder value accretion.
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