Canaccord analyst Neil Maruoka weighed in today with his views on Valeant Pharmaceuticals Intl Inc (NYSE:VRX), as the company will report unaudited fourth-quarter financial results on Monday, February 29, and will host a conference call at 8:00am.

The analyst expects a sequential drag on fourth-quarter earnings in light of the tumultuous end to 2015, which saw the termination of Valeant’s relationship with specialty pharmacy Philidor. However, Maruoka believes these issues are largely transitory and the company ultimately remains anchored by strong fundamentals. The analyst says that investors need to look beyond Q4/15 towards a more optimistic second half of 2016 as Valeant aims to transform its strategy with a focus on driving growth through volume over price.

Maruoka noted, “For Q4/15, we forecast revenue of $2.72 billion, which represents a sequential decrease of (2.3%) and falls slightly below the consensus estimate of $2.77 billion but within the bottom end of Valeant’s guided range. Our estimate represents a 19.4% increase over the same quarter last year, mainly attributable to the acquisition of Salix, which we estimate will contribute >$600 million to the Q4 top line.”

“Our forecast sequential decrease in Valeant’s revenue is a result of lost sales from the termination of the Philidor relationship on October 30th, as the company likely provided many products free of charge to affected customers after ending its relationship with the specialty pharmacy. We believe that these sales will eventually begin to reemerge through other, more traditional, distribution channels (including Walgreens) and the negative impact of this transition from Philidor should largely be limited to the next couple of quarters,” the analyst continued.

Maruoka reiterated a Buy rating on shares of Valeant, with a price target of $170, which represents a potential upside of 111% from where the stock is currently trading.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Neil Maruoka has a yearly average return of -32.3% and a 18% success rate. Maruoka has a -34.3% average return when recommending VRX, and is ranked #3654 out of 3730 analysts.

Out of the 17 analysts polled by TipRanks, 10 rate Valeant stock a Buy, 6 rate the stock a Hold and 1 recommends a Sell. With a return potential of 94%, the stock’s consensus target price stands at $156.42