Analysts are weighing in on the controversial drug giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and drug company Repros Therapeutics Inc (NASDAQ:RPRX), as shares of both companies fell sharply in the last two trading sessions. The analysts reflect on the termination of Valeant’s relationship with Philidor and the cancellation of FDA advisory committee review for Repros’ Androxal NDA.
Valeant Pharmaceuticals Intl Inc
Valeant shares are tumbling 11.20% to $99.01, following the news that the company will end its partnership with Philidor Rx Services, the closely-linked pharmacy that distributes Valeant’s products and is under investigation for its business practices.
Mizuho Securities analyst Irina Rivkind Koffler was the first to commented: “The company hasn’t provided updated guidance but we have already taken down our numbers in anticipation of this type of catastrophe. Valeant guided to 2016 EBITDA of $7.5B but we recently took our numbers to the $6.8B range to account for Philidor disruptions. We have a low $14.83 EPS in 2016, below FactSet consensus of $16.10. The question is, is there anything else? We believe that management will need to provide updated guidance to stabilize the stock but also think that our numbers represent a reasonable estimate for next year.”
The analyst concluded, “We would expect numbers to come down, however, but we already anticipated that in our upgrade. We believe that VRX will remain relatively resilient from here and could rebound to some extent if management provides updated guidance about the business.”
Koffler reiterated a Buy rating on Valeant shares, with a price target of $155, which represents a potential upside of nearly 50% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a total average return of 43.4% and a 68.4% success rate. Koffler has a 35.3% average return when recommending VRX, and is ranked #3 out of 3808 analysts.
Out of the 19 analysts polled by TipRanks, 14 rate Valeant Pharmaceuticals stock a Buy, 4 rate the stock a Hold and 1 recommends a Sell. With a return potential of 106%, the stock’s consensus target price stands at $213.
Repros Therapeutics Inc
In a research report released today, Brean Capital analyst Jonathan Aschoff downgraded shares of Repros Therapeutics from a Buy to a Hold rating, while removing the price target, after the company announced yesterday that the FDA cancelled its advisory committee meeting scheduled for November 3, 2015 to review Repros’ most advanced candidate, enclomiphene, formerly known as Androxal.
Repros shares reacted to the news, dropping 62% to $1.78. Suspiciously, after incredible strength, the stock had been falling off a cliff a few days before the news broke.
Aschoff commented, “Issues regarding the methodology utilized by the lab Repros used for testosterone measures were cited as the reason for the cancellation, and the FDA was concerned about bioanalytical validation. On the conference call, however, Repros made clear that the bigger concern behind the FDA’s back-away was the issue of which is the appropriate population to study and disagreement on whether the lack of testosterone is a reversible disorder in the majority of patients.”
Repros intends to work with the FDA on this concern over 2016. However, the FDA has not given enough clarity for the company to determine if another Phase 3 trial is needed. Given this regulatory setback and our lack of clarity on a path forward with existing information, we are downgrading our rating to Hold from Buy and thus abolishing our target price. We are removing enclomiphene from our model at this point. Repros has about $25 million cash on its balance sheet, which should be sufficient to fund its operations into 2017,” the analyst continued.
According to TipRanks.com, analyst Jonathan Aschoff has a total average return of -3.0% and a 41.6% success rate. Aschoff has a -31.9% average return when recommending RPRX, and is ranked #3543 out of 3808 analysts.