Barclays Initiates Valeant Pharmaceuticals At Overweight

In a recent report, analysts at Barclays initiated coverage of Valeant Pharmaceuticals International Inc VRX by rating the stock Overweight and setting a $200 price target. Analysts believe that the market does not fully appreciate the growth prospects of the company.
Aggressive growth
Analysts point out that the company’s history of acquiring mature products has left Valeant’s own organic pipeline underappreciated. Analysts believe that Valeant will benefit from numerous product launches in upcoming years stemming from its strong pipeline.
A clearer picture
The strength of Valeant’s underlying business was highlighted during its push to acquire Allergan Inc AGN. During that time, all other buyout activities were put on hold, and Valeant’s underlying growth was still strong. Analysts have high hopes for drugs such as recently-launched Jubia and Vesneo. In addition, the company has invested in marketing and promotion in support of many of its other key brands, which has produced recent volume improvements.
After losing out on Allergan to Actavis PLC ACT, analysts expect Valeant to be back on a shopping spree soon, on the hunt for further growth-driving acquisitions.
Earnings growth and multiple expansion
Barclays analysts are projecting 2015 and 2016 earnings per share of $10.36 and $12.09 respectively, both well above consensus estimates. Those promising numbers don’t even include any major acquisitions by the company over the next two years, which is a strong possibility.
Analysts expect that the company’s earnings growth will be accompanied by a multiple expansion as well. They believe the market will shift to valuing Valeant at a similar multiple as Perrigo Company PLC PRGO and Zoetis Inc ZTS.