Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has analysts on the fence after clearing a big hurdle: a big FDA win for its psoriasis drug brodalumab (brand name Siliq). Nonetheless, perspectives vary even across the middle of the road. There are cases made for a greater level of wariness on the risk vs. reward prospects facing Valeant, just as there are those that see the tides could turn over to confidence at any moment.

From the standpoint of Canaccord analyst Neil Maruoka, while FDA approval for the biotech giant’s psoriasis drug is positive, the drug that boasts a “competitive efficacy profile” without being “contraindicated” in patients also stands a risk of limited market opportunity. Why? One predominant reason: The black box warning with “restrictive labeling” for suicidality.

Therefore, the analyst reiterates a Hold rating on VRX with a price target of $19, which represents a 19% increase from where the shares last closed.

“As we had expected following the 14-4 positive vote from the FDA Advisory Committee in July, the FDA has approved Valeant’s brodalumab […] However, due to concerns about suicidality associated with brodalumab, the labeling will include a black box warning and the drug will only be available through a Risk Evaluation and Mitigation Strategy (REMS) program. While restrictive labeling was expected, we believe that the boxed warning and REMS requirement are likely to limit the potential for the drug. Nonetheless, we expect that brodalumab will eventually become a modest growth driver within Valeant’s dermatology franchise. […] Given Valeant’s elevated leverage, lower growth, and higher risk profile, we believe that a discount to the specialty pharma peer group is warranted,” Maruoka opines.

However, even amid “lingering safety concerns,” the analyst ultimately recognizes that the drug’s “strong efficacy hints at potential.” Looking ahead, Maruoka predicts the drug’s peak sales could circle $250 million and “[…] will eventually become a revenue driver for Valeant following its expected launch in the second half of the year.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Neil Maruoka is ranked #4,289 out of 4,459 analysts. Maruoka has a 35% success rate and forfeits 7.6% in his yearly returns. When suggesting VRX, Maruoka loses 29.8% in average profits on the stock.

After Siliq won by a significant margin in a positive advisory panel vote, Rodman & Renshaw analyst Ram Selvaraju believes the drug’s approval was “widely anticipated,” as well as was the black box warning for suicide ideation. Yet, the analyst deems the psoriasis drug vastly undervalued.

For now, though optimistic, Selvaraju remains sidelined on VRX’s overall unsettled picture, reiterating a Neutral rating on shares of VRX with a $23 price target, which represents a 44% increase from where the stock is currently trading.

“However, we believe that the market overall continues to underrate Siliq and its potential in the psoriasis domain, as the prevailing opinion appears to be that the drug is lagging agents like Stelara (ustekinumab), sold by Johnson & Johnson (JNJ; not rated), Cosentyx (secukinumab), from Novartis AG (NVS; not rated), and Taltz (ixekizumab), from Eli Lilly & Co. (LLY; not rated), while the safety profile of the drug may deter broader use. However, we would point investors to the extremely low incidence of suicide in the brodalumab pivotal trials—six such cases occurred— and the fact that patients suffering from psoriasis are known to suffer from heightened depression anyway. Furthermore, we believe that there is a case to be made for brodalumab as a best-in-class drug from an efficacy standpoint, since it handily beat Stelara in a head-to-head setting,” Selvaraju asserts, also highlighting recent asset sales as another advantage weighing in Valeant’s favor.

Though presently the analyst veers to the side of caution, he notes that with the encouraging FDA green light for Siliqu, should the biotech giant turn over a fourth-quarter beat with better guidance for 2017, he could very well see fit to shift to a bullish perspective.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Ram Selvaraju is ranked #4,144 out of 4,459 analysts. Selvaraju has a 38% success rate and faces a loss of 2.8% in his annual returns. However, when recommending VRX, Selvaraju gains 9.7% in average profits on the stock.

TipRanks analytics demonstrate VRX as a Hold. Out of 10 analysts polled by TipRanks in the last 3 months, 10% are bearish on the stock, 60% remain sidelined, and 30% are bearish on the stock. With a return potential of nearly 6%, the stock’s consensus target price stands at $16.78.