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Analysts Mixed Following Valeant's Latest Developments

Analysts Mixed Following Valeant's Latest Developments

Investors of Valeant Pharmaceuticals Intl Inc (NYSE: VRX) had several developments to play with on Tuesday regarding the embattled pharma company.

The company announced the ad hoc committee of the board of directors have completed the accounting review, including various Philidor matters, and has not identified any additional items that would require restatements beyond those previously disclosed. The company intends to file its Form 10-K on or before April 29, 2016.

The news sent shares up as much as 14.5 percent to $29.91.

Related Link: Valeant Shares Squeezed Higher As Ad Hoc Committee Closes Review, Finds No Added Issues

A Reuters report said Valeant plans on cutting its sales force for Addyi, a treatment aimed at female sexual dysfunction.

In another interesting development, a Bloomberg report said the company's creditors were resistant to relaxed lending standards.

Wall Street analysts were mixed on Valeant after the recent developments.

Commenting on the job cut report, Mizuho Securities said, "We view this as an expected first step in the shrinking of the business. We estimate SG&A cost savings in the $60M range associated with these terminations, with some one-time expenses associated with severance payments."

"These terminations are likely to rattle an already fearful and paralyzed organization. We think the company may actively explore additional divestitures, which may further erode its EBITDA, and Pearson should be able to identify additional efficiencies in promotional budgets and within R&D that can generate additional cost savings," analyst Irina Koffler wrote in a note.

"After that, there isn't much left to do since we view the majority of Valeant's assets as unattractive to potential buyers. Our thesis is that there are no quick fixes for Valeant's situation while additional risks and unknowns persist," the analyst noted.

Mizuho reiterated its Underperform rating and $18 price target on shares.

JPMorgan, while maintaining its Overweight rating, said SOTP valuation suggests upside to current Valeant levels.

Analysts led by Chris Schott noted the Ad Hoc Committee's findings de-risk the stock. In addition, Schott sees additional catalysts that could further de-risk the story.

"We see focus returning to both fundamentals (quarterly results/cash flows) and SOTP valuation, where we see Valeant's current asset base representing meaningful upside vs. today's share price," the analyst elaborated.

Meanwhile, BMO Capital said if Valeant files 10-K and prevents technical default then company "could be on the verge of a significant inflection point." The brokerage maintained its Market Perform rating on the stock.

Latest Ratings for VRX

Jun 2018DowngradesBuyHold
Jun 2018UpgradesEqual-WeightOverweight
May 2018UpgradesNeutralBuy

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: BMO Capital Irina Koffler JPMorganAnalyst Color News Reiteration Top Stories Analyst Ratings Best of Benzinga


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