Based on recent prescription data, Mizuho’s top analyst Irina Rivkind Koffler is out with a few updates on beaten-down pharmaceutical company Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and specialty drug maker Endo International plc (NASDAQ:ENDP). The analyst summarized quick takes on each stock, while changing her price targets in different directions.
Before we start, as usual, we like to include the analyst’s trackrecord when reporting on new analyst notes. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Koffler has a yearly average return of 19.1% and a 52% success rate. Koffler is ranked #108 out of 4560 analysts.
Valeant Pharmaceuticals Intl Inc
Koffler continues to expect Valeant to erode further, and she would not be surprised by future guidance cuts, stalled/weak asset sales, and no improvement to prescription trends within its branded portfolios. As such, the analyst cuts her price target to $8.00 (from $9.00) and reiterates Underperform rating on VRX stock.
The analyst wrote, “We lowered 1Q:17 estimates to $2.13 billion in revenues and EPS of $0.87 versus our prior estimates $2.16 billion and $0.92 and FactSet consensus estimates of $2.19 billion and $0.91. For FY:17, our updated estimates of $8.8 billion in revenues and adjusted EBITDA of ~$3.47 billion are below management’s guidance $8.9-$9.1 billion and $3.55-$3.70 billion and consensus ($8.8 billion and $3.60 billion).”
“With the stock trading below $10, we run the risk that share price may stabilize in spite of any additional negative announcements, or that Valeant could unexpectedly sell a large business segment like B&L. However, we think that 2017 guidance may still be reduced and other negative announcements may continue, and these events are more likely and should pressure share price even lower,” Koffler added.
Out of the 14 analysts polled by TipRanks in the past 3 months, three rate Valeant a Buy, nine rate the stock a Hold and three recommend to Sell. With a return potential of 60%, the stock’s consensus target price stands at $15.30.
Endo International plc
Koffler took the other route, maintaining a Buy rating on Endo shares, while raising the price target to $18.00 (from $17.00) based on stronger first quarter profitability guidance. ENDP is currently trading at $10.66, down $0.10 or -0.93%.
The analyst stated, “We revised 1Q:17 estimates to $1.03 billion in revenues and EPS of $1.13 (from $1.05 billion and $1.09 previously) after the recent pre-announcement of $1.015-$1.035 billion in revenues and $440-460 million in adjusted EBITDA. FactSet consensus estimates are currently $1.02 billion and $1.10, so appear beatable. Our updated FY:17 estimates of $3.50 billion in revenues and EPS of $3.63 are in line with management’s guidance $3.45-$3.60 billion and $3.45-$3.75 and consensus $3.54 billion and $3.60. Our updated model includes estimated interest expense related to the new $2.695 billion in term loans and the $1.0 billion revolver, which management indicated should push out debt maturities to at least 2022 with less restrictive covenants.”
The overwhelmingly majority of analysts say Endo is a “Hold.” The average forecast is for the stock to hit $15.67 in the coming months, according to data compiled by TipRanks.