Healthcare analysts weighed in with a few insights on Canadian drug maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and US biotech firm Relypsa Inc (NASDAQ:RLYP). The analysts reflect on Valeant earnings release delay, and Relypsa’s quarterly update. Let’s take a closer look.
Valeant Pharmaceuticals Intl Inc
In a research report released Tuesday, Nomura analyst Shibani Malhotra reiterated a Buy rating on shares Valeant Pharma, with a price target of $175, after the company disclosed that based on the work of the Ad Hoc Board Committee that is reviewing Valeant’s relationship with Philidor, the company will need to restate 2014 and 1H15 earnings and is expected to delay the filing of the 10-K until the committee completes its review.
Malhotra commented, “Valeant believes that approximately $58mn of revenues ($0.10 of GAAP EPS) that was recognized in 2H14 upon delivery to Philidor should have been recognized in 1H15 ($0.09 of GAAP EPS) when Philidor dispensed the products to patients. We note that after Valeant entered into the option to acquire Philidor in December 2014, the company began to consolidate Philidor’s financials and recognize sales through the Philidor channel when the products were dispensed. Given the time period and size of the expected restatement, it appears to be related to this change. The expected restatement seems benign to us; however, the need for a restatement itself further damages management’s credibility (which has not been high recently).”
“Moreover, we cannot fathom how the news regarding the restatement was leaked to the press hours before a formal press release from the company. Management must, as a priority, focus on regaining confidence from the financial community, as investors we speak to are weary from dealing with the seemingly relentless (and mostly unwarranted) volatility in VRX,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Shibani Malhotra has a yearly average return of 9.5% and a 49% success rate. Malhotra has a -22% average return when recommending VRX, and is ranked #441 out of 3666 analysts.
Out of the 25 analysts polled by TipRanks, 14 rate Valeant Pharmaceuticals International stock a Buy, 9 rate the stock a Hold and 2 recommend a Sell. With a return potential of 83.8%, the stock’s consensus target price stands at $154.19.
Relypsa shares are down nearly 7% after the company released its fourth-quarter results, showing that Veltassa’s launch was slower than we expected. However, Cowen analyst Eric Schmidt remains positive on the stock, reiterating an Outperform rating.
Schmidt commented, “Relypsa provided early launch metrics for Veltassa (hyperkalemia). Over 1,200 prescriptions have been written since the drug’s late 2015 launch, though the majority of patients still await reimbursement. Veltassa is now on CMS’s national formulary and agreements are in place with Express Scrips and CVS. We expect RLYP shares to outperform as Veltassa shows signs of becoming a major drug.”
According to TipRanks.com, analyst Eric Schmidt has a yearly average return of 14% and a 33% success rate. Schmidt has a -26.5% average return when recommending RLYP, and is ranked #229 out of 3666 analysts.