Market Overview

Remember When Citron Called Valeant The 'Pharmaceutical Enron'?


In a new report this week, Probes Reporter said that the SEC has confirmed Valeant Pharmaceuticals Intl Inc (NYSE: VRX)’s involvement in an undisclosed investigation that “somehow pertains to the conduct, transactions, and/or disclosures of Valeant.” Valeant’s stock is down 28.0 percent in the past three trading days as investors fearing the impact of the investigation have continued jumping ship.

Related Link: New Data Confirms Valeant's Undisclosed SEC Investigation

Valeant’s stock is now hovering near the $60 level, a number that would have seemed unfathomable to most traders when it was trading above $250 in mid-2015. While there’s no telling how much downside Valeant has remaining, one firm had a $50 price target on the stock back in October when it was trading above $115 per share.

“Citron Research has delivered the proof that something really stinks at Valeant, and it goes beyond their egregious price hikes,” the firm wrote on October 21. The firm went on to draw a number of comparisons between Valeant and Enron, including the careful wording of official statements made by the two companies.

Citron exposed back in October that Valeant had created a number of fake “pharmacies” and provided an explanation as to why. “Citron believes it is merely for the purpose of phantom sales or [to] stuff the channel and avoid scrutiny from the auditors,” the firm wrote.

Now that is seems clear that Valeant is, in fact, under investigation, only time will tell how close Citron’s thesis was to the truth and if Valeant’s stock will eventually make it to Citron’s $50 target or lower.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for VRX

Jun 2018DowngradesBuyHold
Jun 2018UpgradesEqual-WeightOverweight
May 2018UpgradesNeutralBuy

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: Analyst Color Biotech News Short Ideas Legal Opinion Analyst Ratings Movers


Related Articles (VRX)

View Comments and Join the Discussion!

Stocks To Watch During Cowen's 36th Annual Healthcare Conference

JP Morgan Outlook Darkens On First Solar