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Valeant Gets First Downgrade In Over 3 Months

Valeant Gets First Downgrade In Over 3 Months
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The road to a recovery for Valeant Pharmaceuticals Intl Inc (NYSE: VRX) seems long, while in the near term there are a number of uncertainties around the company’s business and cash flow trends, JPMorgan’s Chris Schott said in a report. He downgraded the rating for the company from Overweight to Neutral, while reducing the price target from $50 to $35.

Schott mentioned that Valeant faces some near-term headwinds like Xifaxan and Walgreens prior authorizations. Therefore, earnings are likely to be heavily weighted towards 2H16. Despite this, guidance implies a recovery in the business, while there are several uncertainties related to this as well as a further deterioration of business fundamentals cannot be ruled out.

Related Link: Valeant Isn't A Short-Term Fix

“Most notably, Xifaxan, which represents a key growth driver for the company, has recently underperformed relative to previous expectations, raising questions around the long-term growth prospects for the drug,” Schott wrote.

In the absence of significant divestitures, such as Salix or B&L, or a sale of the company, the road to recovery appears to be a long one.

“From here, we would like to see the company stabilize business trends in key franchises (e.g., an inflection in Xifaxan trends, a recovery in the dermatology franchise) and meet performance targets over the next several quarters,” the analyst stated.

Latest Ratings for VRX

Jul 2017Deutsche BankMaintainsHold
Jun 2017Cantor FitzgeraldInitiates Coverage OnOverweight
Dec 2016Morgan StanleyDowngradesOverweightEqual-Weight

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: Chris Schott JPMorganAnalyst Color Downgrades Price Target Top Stories Analyst Ratings Best of Benzinga


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