Healthcare analysts weigh in on healthcare stocks Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and GW Pharmaceuticals PLC-ADR (NASDAQ:GWPH) following announcements of management changes and meetings discussing recent pipeline data. Each analyst explains how these events will affect the stock, citing regulatory benefits and a potential turnaround.

Valeant Pharmaceuticals Intl Inc

Analyst Shibani Malhotra of Nomura weighed in on Valeant following the company’s announcement that is looking for a new CEO to replace Michael Pearson. The company has been hit hard recently amidst SEC investigations, accusations of fraud and questionable business practices, and government criticism. According to the analyst, the new CEO should be “an outsider with extensive industry experience as Pearson’s successor would enhance Valeant’s credibility,” and names a few leaders of other pharma companies who she believes are suitable for the position.

The analyst also notes the company’s Ad Hoc Committee has not found additional roadblocks to its financial statements other than the previous $58 million of improperly recognized revenue from its partnership with Philidor. As a result, the company plans on filing its 2015 10-k before or on April 29, which according to the analyst means the Ad Hoc review and SEC investigations are almost complete. According to the analyst, a successful, timely 10-k filing represents a catalyst for the stock, as “it will cure the Cross Default of its bond indentures and avoid default under its credit facility.”

Malhotra reiterates a Neutral rating and $60 price target on the stock. She states, “Net, while we maintain our Neutral rating due to the ongoing Ad Hoc Committee review and SEC investigation, we be believe that today’s announcement should be viewed with cautious optimism, as those responsible for Valeant’s recent issues are leaving the company and the board appears to be taking action to repair the company’s credibility with investors.”

Shibani Malhotra has a 39% success rate recommending stocks with an average loss of (8.7%) per recommendation. According to TipRanks’ statistics, out of the 21 analysts who have rated the company in the past 3 months, 7 gave a Buy rating, 4 gave a Sell rating, and 10 remain on the sidelines. The average 12-month price target for the stock is $55.73, marking a 92% upside from where shares last closed.

GW Pharmaceuticals PLC-ADR

Analyst Joshua Schimmer of Piper Jaffray gave his two cents on GWPH after attending a management and investor meeting which discussed epilepsy drug Epidiolex. Last week, the company released positive topline results from its Phase 3 study of the drug in treating Davet syndrome, a childhood epileptic condition. The study met the primary endpoint of reducing monthly convulsive seizures by 39%, compared to the placebo’s 13% reduction.

Following the meeting, the analyst “came away with confidence” regarding the clinical profile of the drug, its potential to treat other seizure conditions, and “the integrity of management,” as well as their next steps to gain regulatory approval. While full p3 study data will only be presented later this year, the analyst notes management’s confidence related to the initial results, pointing to a lack of negative side effects. He states “We are comfortable that various slices and analysis will support the drug’s strong safety/efficacy profile with no concerning imbalances.”

The analyst notes unjustified investor concern regarding the data and reassures that there is nothing to worry about. The analyst explains, “As we have many investors calling and trying to find inconsistencies and/or trouble signs with the P3 DS data, we have the utmost confidence that management is not holding back anything which could be problematic for approval or commercialization.” Related, the analyst states a high likelihood of FDA approval for Epidiolex, as the company is taking the necessary measures of “development through the proper legislative framework” which “supports the agency’s efforts to curtail unregulated medical marijuana use.” The company expects an Advisory Committee meeting review in order to help legalize medical marijuana to aid its fight against states which oppose it.

The analyst reiterates an overweight rating on the company with a $147 price target. Joshua Schimmer has a 21% success rate recommending stocks with an average loss of (21.3%) per recommendation. According to TipRanks, all 6 analysts who have rated the company in the past 3 months are bullish. The average 12-month price target for the stock is $149.33, marking an 85% upside from where shares last closed.