Mizuho analyst Irina Rivkind Koffler is joining the earnings conversation with a preview for Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Allergan plc Ordinary Shares (NYSE:AGN) as the biotech giants get ready to reveal their quarterly results throughout the next week. As far as Valeant, Koffler speculates consensus revenue models are ultimately not realistic when considering the challenged firm’s prospects amid attempts to recover from criminal proceedings and subsequent negative investor sentiment. With regards to Allergan, Koffler also sees another example of consensus modeling projections that seem steep, and has reduced her own product forecasts. Let’s dive in:

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Irina Rivkind Koffler is ranked #104 out of 4,178 analysts. Koffler has a 43% success rate and realizes 15.1% in her yearly returns. When recommending VRX, Koffler yields 18.2% in average profits on the stock. However, when suggesting AGN, Koffler faces a loss of 13.3%.

Valeant Pharmaceuticals Intl Inc

Valeant shares were dipping 12% yesterday after news broke of the troubled biotech giant’s unfolding criminal investigation. Ahead of VRX’s third-quarter earnings release due November 8th, Koffler notes that while this investigation is nothing new, she remains “cautious” approaching the print with anticipations that the corporate team will cut both 2016 guidance as well as outlook for the long-term.

Therefore, Koffler reiterates a Neutral rating on shares of VRX with a $25 price target, which represents a close to 38% increase from current levels.

Presently, the analyst has every expectation for a “challenging” quarter for the firm from year-over-year dips in revenue to EBITDA, particularly if VRX can triumphantly divest assets “during a difficult market environment.” Koffler models third-quarter revenues of $2.44 billion and $1.63 in EPS, under FactSet consensus of $2.51 billion and $1.76.

Koffler contends that while the firm could have seen a jump in revenue to help the quarter from selling product into the hospital channel, despite realizing a “positive bump” in units, as indicated by Symphony Health, “it is still obvious that overall Xifaxan growth is slowing drastically […] The latest headlines on criminal charges appear to be related to progress on an investigation that was disclosed by the WSJ in August but we are still uncertain if the stock can recover ahead of the November 8 earnings call. Management also plans new financial reporting within its key segments.”

When assessing debt covenants, Koffler does see there exists “some breathing room,” with VRX meeting its interest coverage ratio of 2 to 1, a cut from the prior ratio of 3 to 1. Most recently, Koffler changed projections to $1.66 billion in interest expense for the financial year of 2016, noting that the firm needs to be able to generate EBITDA in 2016 of $3.32 billion, in the context of guidance of $4.8 to $4.95 billion. “Next year appears safe but is more worrisome due to divestiture uncertainty. We don’t see anything catastrophic,” Koffler opines.

Looking ahead to VRX business dealings next year, the analyst forecasts a “business decline,” surmising, “Consensus currently models $10.4B for 2017 revenues, which we view as ‘best case’/unrealistic.”

TipRanks analytics indicate VRX as a Hold. Based on 11 analysts polled in the last 3 months, 3 rate a Buy on VRX, 6 maintain a Hold, while 2 issue a Sell. The 12-month price target stands at $33.56, marking an 88% upside from where the shares last closed.screen-shot-11-01-16-at-04-13-pm

Allergan plc Ordinary Shares

“Fine-tuning estimates” prior to tomorrow’s release of quarterly results, November 2nd, Koffler offers insight into Allergan, reiterating a Buy rating on AGN while lowering the price target from $299 to $293, which represents a 40% increase from where the shares last closed.

Koffler explains she has decided to reduce product projections after new insights since she last made these calculations and taking into account “the latest M&A and regulatory developments. Consensus estimates again appear too high to us, and we will reassess our position on this name after the November 2 earnings call and analyst event.”

Heading into the biotech giant’s third-quarter earnings, Koffler projects $3.54 billion in revenue and EPS of $3.34, falling below the Street’s estimates of $3.72 billion and $3.58.

After discovering that her estimates in cosmetic and ophthalmic products did not fully convey seasonal impact coupled with the company’s plans to cut about $25 million in revenues for Anda business proceedings from the firm’s product sales model, considering AGN just recently divested the portfolio at the start of October, Koffler has tweaked estimates. The analyst now models $14.45 billion in revenue, below 2016 guidance of $14.65 to $14.9 billion. For 2016 EPS, the analyst calls for $13.63 in EPS, under consensus of $13.96, but within guidance of $13.75 to $14.20.

Koffler expresses, “We raised 3Q:16 share count from 412M to 414M shares since mgmt. indicated it got aggressive with its buyback only at the end of 3Q. We think the company will be able to purchase even more shares with whatever remains due to the decline in the stock price and we therefore lowered the share count employed in our DCF analysis from 400M shares to 396M shares.”

With regards to pipeline progress, “We view the recent $200M acquisition of a Phase IIb gastroparesis asset as risky due to high placebo response, uncertainty about ability to demonstrate no vomiting deterioration in Phase III, and the need to validate PRO instruments,” the analyst believes, with expectations for launch assumptions past the year 2020.

Additionally, Koffler has calculated two extra months of sales for Restasis MDPF, indicated to increase tear production in patients whose tear production is presumed to be suppressed due to ocular inflammation associated with keratoconjunctivitis sicca, in 2016 on back of product approval. Lastly, the analyst boosted her likelihood of success for the firm’s desmospressin nasal spray SER-120, designed to treat nocturia, a common yet often under-diagnosed urological disorder in adults who wake up two or more times each night to empty their bladders, as the drug just received a “favorable” FDA panel vote on October 19th.

TipRanks analytics exhibit AGN as a Strong Buy. Based on 15 analysts polled in the last 3 months, 13 rate a Buy on AGN, while 2 maintain a Hold. The consensus price target stands at $306.00, marking a 46% upside from where the stock is currently trading.screen-shot-11-01-16-at-04-14-pm