Analysts weigh in on Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) as the company tries to defends itself against fraud allegations, and Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) ahead of earnings.

Valeant Pharmaceuticals Intl Inc.

Earlier this week, Valeant held a detailed investor call to defend itself against accounting fraud accusations. In brief, the company’s relationship with Philidor, a pharmaceutical company, has been brought into question as Valeant was listed as Philidor’s only client.

Following the call, Shibani Malhotra from Nomura met J. Michael Pearson, the company’s CEO, to discuss some of her outstanding questions following the call. As a result, Malhotra reiterated a Buy rating on the stock; however, she’s reduced her price target to $220, down from the earlier target of $290.

Malhotra stat

In her report, Malhotra says she is confident that the recent reports accusing the company of fraud are “unfounded.” Based on the “intrinsic value” of the stock, even though the consensus is not in its favor, Malhotra says the stock is highly “undervalued.”

Malhotra highlighted key takeaways from the meeting, explaining that Valeant’s priority is to repurchase debt from the open market. Also, the company’s senior management will be glad to buy the company’s shares at current market prices. Furthermore, in spite of fraud allegations, management is not shying away from Philidor because of its benefits to physicians, patients, and the company.

The analyst goes on to address the topic of inventory reduction in Salix Pharmaceuticals, the company acquired by Valeant in April. As the inventory reduction was lower-than-expected, it has led to concerns that Valeant’s revenues were inflated. However, Malhotra dismisses these concerns as “unfounded.”

Shibani Malhotra has an overall success rate of 76% recommending stocks with an average return per recommendation of 25.8%. Of the 17 analysts polled by TipRanks who have recently rated Valeant’s stock, 12 have rated it as Buy, 4 have rated it as Hold, and 1 has rated it as Sell. The average consensus price target for Valeant’s stock is $211.13, an upside of 92.74% over current levels.

Regeneron Pharmaceuticals Inc.

Regeneron will release its 3Q15 results on November 4, 2015. Yesterday, Roth Capital analyst Joseph Pantginis weighed in on the stock, maintaining a Neutral rating and a 12-month price target of $527.
REGN consensus

Pantginis expects total revenues of $1.025 billion (a 2.7% increase from the previous quarter and a 41.3% year-over-year), net income of $143.1 million, and diluted GAAP EPS of $1.24. The analyst explains, “We believe there is the potential for REGN to surpass our projections and given the current sentiment in the market looking for organic revenue growth, we believe this could be translated into upward movement for the stock.”

The analyst expects net Eylea revenue “to cross the $1 billion mark for 3Q15 reaching ~$1.02 billion.” Eylea is Regeneron’s top revenue generating drug that treats a common cause of blindness in the elderly. The analyst also expects the recently approved Praluent, a new cholesterol-lowering drug, to achieve blockbuster status. However, Pantginis cautioned, “Praluent is facing patent challenges from Amgen which could have a negative impact on the drug’s traction.”

On November 9th, Regeneron will present data from the Phase III TARGET and ASCERTAIN Studies on Sarilumab, an IL-6 receptor antibody for the treatment of rheumatoid arthritis (RA).  Pantginis noted, “We currently assign $24.70 per share to Sarilumab in our clinical NPV model with a 90% probability of success and $1.12 billion peak sales.” He further added, “The issue is whether Sarilumab could be differentiated from tocilizumab,” an RA drug produced by Hoffmann-La Roche, “based on its safety profile, possibly by not having a black box warning on its label.”

Pantginis notes several reasons to be bullish on Regeneron, including the company’s collection of late stage products, deep pipeline, and strong cash management, all of which ensures solid growth prospects for the company.

Pantginis has rated Regeneron 24 times, earning a 100% success rate recommending the company and a +34.4% average return per recommendation when measured over a one-year horizon. Out of 12 analysts polled by TipRanks who have rated Regeneron within the last three months, 7 are bullish on the stock while 5 are waiting on the sidelines. The average 12-month price target for Regeneron is $635.73, marking a potential upside of 13.47% from current levels.