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Valeant Shares Carry Too Much Risk To Be Recommended As An Investment: Wells Fargo

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Valeant Shares Carry Too Much Risk To Be Recommended As An Investment: Wells Fargo

Valeant Pharmaceuticals Intl Inc (NYSE: VRX) announced on Monday that three senior executives will be leaving the company.

The executives that will be leaving the company include:

  • Valeant's ex CFO Rob Rosiello, who stepped down in August but remained with the company since.
  • Ari Kellen, executive vice president who was responsible for the Bausch + Lomb unit in the U.S.
  • Anne Whitaker, an executive vice-president.

According to Canada-based Business News Network, all three of the departures were voluntary.

The announcement contributed to Valeant's stock trading below the $15 per share mark yet again. On Wednesday, the stock was trading at $14.19, down more than 4 percent at $14.18 and within striking distance of its 52-week low of $13.77.

Wells Fargo: Departures Reflect Instability

David Maris of Wells Fargo commented in a research report that the departure of the executives reflects "instability" at Valeant, especially since Whitaker has been with he company for less than two years.

Meanwhile, Valeant's replacements for the departing executives, including William Humphries as EVP and head of Dermatology, will have no impact on the company's business trajectory. The hiring also suggests a potential sale of a business unit including Salix and B&L is less likely as companies "do not usually hire executives for businesses that are about to be divested."

Perhaps more alarming, Maris suggested the executive departures is part of creating the "new Valeant" yet it still looks a lot like the "old Valeant" but with lower growth and profitability potentials and higher debt.

Bottom line, the analyst believes Valeant's stock carries too much risk to be recommended as an investment.

Latest Ratings for VRX

DateFirmActionFromTo
Jun 2018TD SecuritiesDowngradesBuyHold
Jun 2018BarclaysUpgradesEqual-WeightOverweight
May 2018MizuhoUpgradesNeutralBuy

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: Ari Kellen Bausch + Lomb BNN David Maris Rob RosielloAnalyst Color Analyst Ratings Trading Ideas Best of Benzinga

 

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