Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares stumbled over 10% in the past two days, after the Wall Street Journal reported that the deal making its way through the grapevine of a Salix portfolio sale to Takeda Pharmaceuticals for $10 billion is no longer on the table. The two companies had a falling out when it came to the price.

From Canaccord analyst Neil Maruoka‘s perspective, “Selling can be harder than buying” and as such, he reiterates a Hold rating on VRX with a price target of $17, which represents a just under 9% increase from where the shares last closed.

Maruoka opines, “Although this potential large transaction would have allowed Valeant to take significant strides towards de-levering its balance sheet, we did have some concerns over the reported valuation; further, we believed the divestiture of these assets could have removed an important growth driver in Xifaxan.”

Moving forward, “We believe it is critical that Valeant continue to focus on debt reduction given its cumbersome balance sheet; with Salix seemingly on hold (or off the table), we expect the company will continue to pursue divestures of non-core assets. Nonetheless, the reported pushback on the price for Salix underscores our concerns that Valeant will be able to achieve expected valuations in its divestiture process,” Maruoka concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Neil Maruoka is ranked #4,158 out of 4,243 analysts. Maruoka has a 10% success rate and faces a loss of 43.9% in his yearly returns. When recommending VRX, Maruoka loses 38.9% in average profits on the stock.

TipRanks analytics demonstrate VRX as a Hold. Based on 11 analysts polled in the last 3 months, 2 rate a Buy on VRX, 7 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $22.06, marking a 41% upside from where the stock is currently trading.screen-shot-12-01-16-at-07-17-pm

 

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