Ahead of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) reporting second-quarter financial results tomorrow, before market open, Canaccord analyst Neil Maruoka keeps in mind the biotech giant’s history recently marred by challenges. In reaction to VRX’s delayed 10-K, accounting restatement, guidance reduction, and public criticism before the U.S. Senate Special Committee over problematic drug pricing, Maruoka reiterates a Hold, suggesting an unchanged price target of $28.

As VRX soon closes its second-quarter, Maruoka forecasts revenue of $2.44 billion, just under the Street’s projection of $2.47 billion, taking into account a 2.8% increase that factors in Valeant’s continued transition and “ramp-up into Walgreens.” All adjustments Maruoka has to make ahead of the quarter are modest to 2016 and 2017 annual estimates.

Maruouka explains though he maintains caution in light of VRX struggles, the analyst does recognize distinct opportunity for management to start restoring investor confidence, and hopes Valeant will “piggy back on some of the more recent positive news, including the FDA’s approval for Relistor oral, DODAC support for brodalumab, and a likely approval for Vesneo before the end of the year.”

Once Valeant reports its earnings, Maruouka highlights a keen eye paid to the firm’s transition to Walgreens, one that has reflected more challenges than initially expected. What for Valeant is considered ‘fixable’ headwinds, the analyst sees as a long-term path required to brainstorm the right solution, which is precisely why Maruouka awaits the second-quarter earnings call with great anticipation.

Recommended Article: Morgan Stanley Highlights Five Big Questions for Valeant Pharmaceuticals Ahead of Upcoming Earnings Report

Meanwhile, the analyst also awaits updates on “…progress on negotiations with managed care, and possible divestitures of non-core assets to pay down the company’s high debt levels. We will also be looking for further assessment of the company’s control environment and ‘tone-atthe-top’ in relation to the concerns highlighted by the ad hoc committee earlier this year.” Marouka leaves small breathing room in his low end estimates for adjusted earnings guidance with the belief that divestitures and operational execution have the potential to offer balance sheet flexibility as VRX moves forward.

As usual, we find it important that you take every new analyst’s notes with a grain of salt, as they often do successfully impact stock prices, but we advise wisely to take check their performance. According to TipRanks, Neil Maruoka is ranked #4,016 out of 4,102 analysts. Maruoka has a 16% success rate and averages a loss of 36.5% in her returns. When recommending VRX, Maruoka loses 38.9% in profits.

TipRanks analytics demonstrate VRX as a Hold. Based on 17 analysts polled by TipRanks in the last 3 months, 5 rate a Buy, 9 maintain a Hold, and 3 issue a Sell. The 12-month average price target is $40.13, marking a nearly 83% upside from where the stock is currently trading.

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