Aegis Capital Reiterates Buy on Valeant Pharmaceuticals International on Obagi Acquisition

In a report published Wednesday, Aegis Capital analyst Raghuram Selvaraju reiterated a Buy rating and $80.00 price target on Valeant Pharmaceuticals International (NYSE: VRX).In the report, Selvaraju noted, “Once more, Valeant has lived up to its reputation as perhaps the most acquisitive company in the pharmaceutical sector. This morning, the firm announced that it has reached an agreement to acquire Obagi Medical Products, Inc. (OMPI/NASDAQ, Not Rated), a dermatology-focused firm, for $19.75 per share. The purchase price of $344mm represents a 2.9x multiple on 2012 sales of approximately $120mm and constitutes a 28% premium to the prior closing price of Obagi shares. In our view, this was a somewhat surprising strategic decision for Valeant given the fact that the company is already the #1 dermatology firm in the U.S., and considering the fact that Obagi is primarily a U.S.-focused company with only about 16% of sales coming from outside this market.”Valeant Pharmaceuticals International closed on Tuesday at $71.44.