Analyst Chris Schott of J.P. Morgan weighed in with a few insights on healthcare companies Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Endo International plc (NASDAQ:ENDP) and Teva Pharmaceutical Industries Ltd (NYSE:TEVA) ahead of second-quarter earnings.
According to TipRanks, Schott has a yearly average loss of 0.9% and a 57% success rate. The analyst has a 34.4% average loss when recommending Valeant, a 25.8% average loss when recommending Endo and a 28% average loss when recommending Teva Pharmaceuticals. He is ranked #2,914 out of 4,081 analysts.
Valeant Pharmaceuticals Intl Inc
Schott expressed his concerns regarding Valeant Pharmaceuticals’ second quarter earnings, which will be released on August 9. The analyst believes that there are several uncertainties that will not be solved in the near term.
These uncertainties include a slowdown in Xifaxan growth, lower-than-expected ASP from Walgreens and increased legal and administrative expenses. Xifaxan, which is an essential part to the company’s growth, hasn’t been hitting expectations and Schott does “not see a clear path to re-acceleration for the product.”
These factors lead the analyst to believe that earnings will be weighted towards the second half of the year and that Valeant will be unable to reach its 2016 expectations.
When earnings are released Schott will pay attention to any initiatives meant to stabilize business trends, potential asset sales and CEO Joe Papa’s future plans for the company.
The analyst maintained his Neutral rating on Valeant with a price target of $35, marking a 53% increase from current levels.
TipRanks shows that out of the 17 analysts who rated Valeant Pharmaceuticals in the last 3 months, 29% gave a Buy rating, 53% gave a Hold rating and 18% gave a Sell rating. The average 12-month price target for the stock is $41.64, marking an 82.47% upside from current levels.
Endo International plc
Schott is confident in Endo due to its acquisition of Par Pharmaceutical. The analyst believes that this will help increase Endo’s generics business by “adding critical mass, a growing ANDA pipeline, and solid EPS accretion in 2016 and beyond.”
The analyst expects Par to increase Endo’s presence in lower multiple generics business as well as help with organic growth in brand and generics business. Schott also believes that Endo’s Vasostrict patent will take off pressure from short-term risk.
The analyst expects to see second quarter sales/EPS of $872 million and $0.70. He maintained his Overweight rating on Endo International with a price target of $40, marking an 129% increase from current levels.
TipRanks shows that out of the 12 analysts who rated Valeant Pharmaceuticals in the last 3 months, 33% gave a Buy rating, and 67% gave a Hold rating. The average 12-month price target for the stock is $26.10, marking an 49.14% upside from current levels.
Teva Pharmaceutical Industries Ltd
In addition, Schott gave his thoughts on Teva ahead of its second-quarter earnings on August 4. The analyst is expecting to see an increase in earnings and see “an emerging branded pipeline support longer-term growth beyond 2018.”
Teva recently raised its second quarter estimates in addition to providing guidance for 2016-2019. Schott believes that this long-term estimate “removes an overhand and provides comfort in the longer-term growth outlook.”
The analyst will also keep an eye on key business trends specifically generics performance, which he expects to be down due to less launches.
Schott sees Teva shifting away from relying on its drug Copaxone, which makes it an attractive stock. He also believes there is room for the company to grow over time as it de-levers and increases its growth after its acquisition of Allergan.
The analyst maintained his Buy rating with a price target of $75, marking a 37% increase from current levels.
TipRanks shows that out of the 16 analysts who rated Teva Pharmaceuticals in the last 3 months, 66.7% gave a Buy rating and 33.3% gave a Hold rating. The average 12-month price target for the stock is $67.53, marking a 23% upside from current levels.