Analysts from sell-side firm BMO Capital weigh in on three healthcare giants. While one remains on the sidelines of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) following a dismal earnings report, another is incrementally bullish on Celgene Corporation (NASDAQ:CELG) and Incyte Corporation (NASDAQ:INCY) thanks to pipeline updates.

Valeant Pharmaceuticals Intl Inc

Valeant released first quarter earnings earlier this week, posting disappointing figures that underscore the several obstacles the company has faced over the past months. The company lowered guidance, yet again, leaving Alex Arfaei of BMO to note that Valeant doesn’t have much room left to continue this trend of lowering guidance.

In its first quarter earnings report, Valeant slashed full-year 2016 revenue estimates from the range of $11B to $11.2B down to the range of $8.5B to $9.5B, and slashed full-year 2016 EPS between $6.60 and $7, down from the range of $8.50 to $9.50. Arfaei comments, “Although we expected Valeant to lower its guidance, the magnitude of the downward revision was greater than we and the market expected.” The analyst believes that Valeant will meet this lowered guidance, but acknowledges that visibility remains low.

Arfaei is primarily concerned with the company’s dermatology business, specifically regarding profitability. He comments, “This had been our biggest concern following Philidor and the Walgreens’ deal, and one of the key reasons we expected the guidance lowering.” Valeant still has severe debt to repay, though the analyst notes that it should be able to pay back about $1.7B this year. He also acknowledges the possibility of Valeant selling its “non-core assets (e.g., surgical, dentistry, neuro, and other) worth as much as $5.5Bn to further lower its debt and alleviate covenant breach concerns.”

Arfaei reiterates a Market Perform rating on Valeant but lowers his price target from $44 to $38.

According to TipRanks, Arfaei has a 68% success rate recommending stocks with a 5.6% average return per rating. Out of the analysts who have rated Valeant in the last 3 months, 33% are bullish, 19% are bearish, and 48% are neutral. The average 12-month price target is $42.75, marking a 79% upside.

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Incyte Corporation

Following a meeting with management, Ian Somaiya of BMO weighs in the company’s development strategy. Focus remains on epacadostat, the company’s pipeline drug to treat specific forms of cancerous tumors.

Somaiya describes that epacadostat’s development strategy “balances data with need for speed.” New Phase 3 trial data will be released in 18 weeks. The analyst expects epacadostat and baricitinib, a drug to treat rheumatoid arthritis and psoriasis, to represent the biggest sources of upside for the company.

At last week’s ASCO meeting (American Society of Clinical Oncology), the company “shared its views on the key datasets from the 2016 ASCO, which highlight need for novel combos and role for chemo.” The analyst believes the company’s focus “on understanding changes in tumor biology combined with its data sharing agreement with key I/O players increases probability of success for epacadostat outside melanoma, with Phase II data from larger expansion cohorts expected by YE16.”

Following these company updates, Somaiya reiterates an Outperform rating on the company and raises his price target from $91 to $97.

According to TipRanks, Somaiya has a 61% success rate recommending stocks with a17.1% average annual return per rating. He is ranked in the top 4% of all analysts on Wall Street. All analysts covering INCY on TipRanks are bullish on the stock with and average 12-month price target of $90.14, marking a 9% upside.

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Celgene Corporation

Ian Somaiya goes on to cover Celgene, which also presented data at ASCO. While Revlimid is already an FDA-approved drug to treat transfusion-dependent anemia, all eyes were on Phase 1 data of Keytruda + Revlimid to treat Revlimid-refractory myeloma.

Somaiya comments on this promising data that demonstrated “high efficacy,” with half of the patients achieving stringent complete response (CR) or partial response (PR). The analyst elaborates, “Notably, even Revlimid-refractory patients (75% of patients in the trial) had similar response rates, with 37% of patients achieving a CR/PR We believe this could point to longer duration of use than the six months we currently assume in the third-line plus setting and upside to our estimates.”

The analyst believes that this data, coupled with other ongoing combination trials, “reflect Celgene’s strategy of pursuing combination trials to ensure Revlimid and Pomalyst remain backbone therapies across the myeloma disease spectrum.” He continues, “We see additional evidence of this strategy in Celgene’s partnership with AstraZeneca for durvalumab.”

Somaiya reiterates an Outperform rating on the stock with a $132 price target, marking a 24% upside.

According to TipRanks, 80% of analysts are bullish on Celgene while 20% remain neutral. The average 12-month price target is $140, marking a 31% potential upside from current levels.