Valeant Investors: Cantor Says It's Time To Stop Waiting For The Other Shoe To Drop

Analysts at Cantor Fitzgerald turned incrementally bullish on Valeant Pharmaceuticals Intl Inc VRX after the once-troubled pharmaceutical company is showing signs of sustaining momentum.

Cantor Fitzgerald's Louise Chen maintains an Overweight rating on Valeant's stock with a price target boosted from $18 to $23 as the company's execution continues to "meet or exceed" expectations. The company has now reached a positive inflection point in its turnaround and investors can now stop waiting for the other shoe to drop.

Valeant's momentum could be traced back to early May when management hosted its annual shareholder meeting, Chen explained. At that point investors signaled confidence in the company's CEO Joe Papa and CFO Paul Herendeen who can return the company back to growth and execute against its stated objectives.

One month later, the board was "re-invigorated" with the addition of John Paulson and the addition of Arthur Shannon to lead the Investor Relations team is another positive development.

Debt Concerns And Drug Launches

One of the biggest overhangs plaguing Valeant is the company's large debt-load. But Valeant is in a position to refinance its debt and push out maturities beyond where it stands today, Chen said. While the company has to use all the proceeds from asset sales to finance its term loans (per credit agreements) it can also use free cash flow to pay back its bank debt, secured debt and senior unsecured debt, and other obligations.

In addition, investor attention can now focus more on Valeant's new drug launches at a time when its pipeline and base business have "stabilized."

Looking forward, the analyst noted the following important dates for drugs with blockbuster potential: Vyzulta PDUFA (August 24), IDP-118 submission 2H17 and Luminesse PDUFA (December 27).

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