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“Valeant Pharmaceuticals Intl Inc (NYSE: VRX) has taken its first significant steps toward de-levering its balance sheet, announcing the divestiture of Dendreon and several dermatology brands for combined cash consideration of ~2.1 billion,” Canaccord Genuity’s Neil Marouka said in a note.
Marouka maintains a Hold rating on the company, while raising the price target from $17 to $19.
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De-Leveraging The Balance Sheet
The analyst believes these moves by Valeant Pharma are positive, although they highlight potential challenges within the process for the company, going forward.
“The ability to achieve higher valuations probably will require giving up higher-growth products; also, potential buyers may not be able to achieve the same synergies identified by Valeant when the assets were acquired,” Marouka mentioned.
Following the divestitures, the analyst estimated that the company would have total debt worth $28.3 billion remaining.
Discount Warranted
Although the announced assets sales are the biggest to date, Marouka noted that the valuations achieve were only slightly accretive to Valeant Pharma’s leverage ratio.
“Given Valeant’s elevated leverage, lower growth, and higher risk profile, we believe that a discount to the specialty pharma peer group is warranted,” the analyst went on to say.
In the meantime, positive data from Valeant Pharma’s second Phase III trials of IDP-118 indicate that there still are avenues of growth within the company’s pipeline.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.