Canaccord Weighs in on Valeant Pharmaceuticals Intl Inc (VRX) Amid Regime Turnover of High-Level Executives


Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares were falling 5% yesterday after the reveal that three high-level executives were on their way out of the firm. However, to smooth the transition, the troubled biotech giant announced the appointment of William Humphries to the role of Executive Vice President, Dermatology, who is set to convey a great deal of experience in both dermatology as well as aesthetics.

Previously, Humphries had served as CEO of Merz North America, President of Steifel (which GlaxoSmithKline acquired), combined with senior roles at Allergan.

For Canaccord analyst Neil Maruoka, this turnover was forthcoming and is to be “expected as Valeant transitions to a new regime.” Amid the departures of key executives and the necessary upheaval the giant confronts, the analyst reiterates a Hold rating on VRX with a price target of $17, which represents a just under 16% increase from where the shares last closed.

Maruoka opines, “Concurrently, Valeant has also announced the departure of EVPs Anne Whitaker and Ari Kellen, as well as former CFO Rob Rosiello. While we never consider it to be good news when senior executives leave a company, in the case of Ms. Whitaker and Dr. Kellen, these individuals have remained with Valeant through a turbulent period and this may be appropriate timing to transition out of their roles. For Mr. Rosiello, he helped guide Valeant through recent accounting restatements and helped facilitate the recruitment of current CFO Paul Herendeen.”

Overall, “In these instances, we believe the changes may be good as the company seeks to reignite organic growth in its core franchises. We believe it is critical that Valeant remain focused on debt reduction given its cumbersome balance sheet, and we expect the company will continue to pursue divestures of non-core assets. In the current challenging environment, we have some concerns that Valeant will be able to achieve expected valuations in this process,” the analyst contends.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Neil Maruoka is ranked #4,191 out of 4,273 analysts. Maruoka has a 12% success rate and faces a loss of 43.2% in his yearly returns. When suggesting VRX, Maruoka loses 38.9% in average profits on the stock.

TipRanks analytics exhibit VRX as a Hold. Based on 11 analysts polled in the last 3 months by TipRanks, 2 rate a Buy on VRX stock, 7 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $22.06, marking a 50% upside from where the stock is currently trading.

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