Analysts Weigh In: Are Valeant Pharmaceuticals Intl Inc (VRX) And Sarepta Therapeutics Inc (SRPT) Heading For Breakdown?


Valeant Pharmaceuticals Intl Inc

Mizuho Securities analyst Irina Rivkind Koffler is one of Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s biggest bears, but she is also one of the top analysts rated who cover the stock.

Today, Koffler reiterated an Underperform rating and an $18 price target on the stock, after the drug maker finally filed its 2015 audited financial statements with the Securities and Exchange Commission. The analyst sees the catalyst as an opportunity for investors to sell the stock at a relatively good price, and it appears that investors listened. Valeant shares are currently trading at $33.03, down $2.22 or 6.30%.

Koffler noted, “The 10-K highlights how dependent the company has been on M&A and price increase, rather than volume growth. […] Valeant generated $2.2B in GAAP operating cash flow in 2015 but we expect this number to contract in 2017 and beyond, which may make it challenging to repay the $3.17B in debt due in 2018. (1) There were a number of legal investigations, primarily on Philidor, pricing, and patient assistance programs we are still digesting but nothing especially surprising.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a yearly average return of 26% and a 53% success rate. Koffler has a 17.5% average return when recommending VRX, and is ranked #16 out of 3913 analysts.

Out of the 21 analysts polled by TipRanks, 7 rate Valeant stock a Buy, 10 rate the stock a Hold and 4 recommend a Sell. With a return potential of 47%, the stock’s consensus target price stands at $49.

Sarepta Therapeutics Inc

In a research report released Friday, Jefferies analyst Gena Wang downgraded shares of Sarepta Therapeutics Inc (NASDAQ:SRPT) from Hold to Underperform, with a price target of $7, following an FDA advisory panel’s rejection of the company’s experimental drug for Duchenne muscular dystrophy, a fatal genetic disease with no cure.

Wang wrote, “While the sympathy expressed by CDER director Dr. Woodcock to DMD pts fueled some speculation on potential approval of eteplirsen, the FDA officials emphasized that the agency is a science-based org and current weak evidence based on FDA analysis could not support drug effect in our view. We continue to see low prob of approval on PDUFA date (May 26) with likely new controlled Ph3 required for full approval.”

“Dr. Eric Bastings, deputy director of division of neurology products, stressed that the FDA is a science-based org, regardless of the pressure placed onto it. It is understandable that CDER director Janet Woodcock noted flexibility and Type 2 error (not approving drugs that are effective) at the AdCom, and expressed sympathy to pts afterwards, the flexibility should be based on “substantial evidence”, according to FDA’s AdCom presentation. Current weak biomarker and clinical data do not appear to constitute substantial evidence for accelerated/standard approval,” the analyst continued.

According to TipRanks’ statistics, out of the 13 analysts who have rated the company in the last 3 months, 4 gave a Buy rating, 6 remain on the sidelines, while 2 are bearish. The average 12-month price target for the stock is $15.67, marking a 7% upside from where shares last closed.