Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is a biotech giant that continues to struggle, and ahead of the bell tomorrow, Cancaccord certainly is not ready to wager its chips on VRX’s prospects. Maybe by second quarter, sales will be stronger and the Salix segment could drive more growth, but this remains to be seen. Meanwhile, Ocular Therapeutix Inc (NASDAQ:OCUL) is in worse shape from BTIG’s viewpoint, with the analyst going as far as to downgrade OCUL from a once bullish perspective to one of strict caution. The big question lies on whether OCUL can keep its PDUFA date and still seal approval from the FDA for Dextenza. Let’s dive in:

Valeant’s Uphill Divestment Battle 

Valeant releases first-quarter earnings tomorrow and Canaccord analyst Neil Maruoka is merely lukewarm in his sentiment on this troubled biotech giant. Heading into the print, the analyst believes maybe second quarter could see more results thanks to Salix, but for now, as Valeant faces the burden of looming debt. Anticipating the first quarter showing to not be a strong one, the analyst reiterates a Hold rating on shares of VRX with a $12 price target, which represents a 20% increase from where the stock is currently trading.

For the first quarter of 2017, the analyst projects a top line of $2.1 billion in revenue coupled with $0.9 billion in adjusted EBITDA, compared to consensus revenue expectations of $2.2 billion and adjusted EBITDA mirroring at $0.9 billion. For the full year, the analyst once anticipated EPS of $4.43, but has since lowered his expectations to $3.38. Notably, the biotech giant does not offer an outlook for EPS, and the analyst adds he finds this “metric to be less relevant to our fundamental view.” Though the analyst predicts 2017 revenue and adjusted EBITDA to be in the guidance range of the giant, his forecasts swim at the deeper end of the range.

Maruoka’s expectations for the first quarter are not all that high, as he notes, “Based on the US products we track through IMS, we expect Q1 to be a seasonally weak quarter, with volumes resetting for several key products including Xifaxan. While the recent expansion of the Salix salesforce could be a growth driver, we do not expect this to move the needle until Q2.”

Meanwhile, “Guidance likely to be adjusted lower over the course of the year. Last quarter, Valeant guided for 2017 revenue and adjusted EBITDA that was below analyst estimates. However, Valeant’s new guidance did not exclude ~$135 million of prorated 2017 EBITDA contribution from the recently divested dermatology and Dendreon assets, and our forecasts are therefore at the bottom end of the guided range.”

Moving forward, “Divesting at attractive valuations proves to be challenging,” the analyst opines, acknowledging that even with a “welcome” $220 million debt repayment, pro forma net debt of $28.0 billion hangs in the balance. “Although recently announced divestitures are positive, they nonetheless underscore the challenges of achieving accretive multiples without giving up growth-driving assets,” Maruoka concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Neil Maruoka is ranked #3,871 out of 4,568 analysts. Maruoka has a 41% success rate and forfeits 1.8% in his annual returns. When recommending VRX, Maruoka faces a loss of 29.8% in average profits on the stock.

TipRanks analytics show VRX as a Hold. Out of 14 analysts polled by TipRanks in the last 3 months, 2 are bullish on Valeant stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 46%, the stock’s consensus target price stands at $14.70.

Ocular’s Potential Dextenza Caveat

Is Ocular’s post-ophthalmic surgery ocular pain drug Dextenza in trouble? BTIG analyst Dane Leone votes yes, fearing the PDUFA date as it stands is at risk of a setback. Concerned that Dextenza launch could be facing significant lag time amid regulatory problems, the analyst steps down to the sidelines, downgrading from a Buy to a Neutral rating on OCUL without suggesting a price target.

The stumbling block that just tumbled down the path of potentially separating Dextenza from getting that elusive green light from the FDA is a second Form 483, revealing the manufacturing facility might have some issues at stake. “If management is unable to respond in 15 days or needs a re-inspection, the PDUFA date may be extended, resulting in a potential inability to meet the September 2017 deadline for the reimbursement application,” the analyst underscores.

While the OCUL team tried to downplay the setback, arguing that as many as 80% to 90% of facility inspections are tagged with 483 letters, the analyst contends otherwise. If Leone is correct that only 47% of inspections receive 483 letters, there could be real reason for investors to worry.

“If our concerns are misplaced, we would be happy to upgrade our outlook, but do not think the downside risk of a further delay is worth holding at current levels,” continues Leone, explaining, “Ongoing pipeline efforts remain on track along with the promising partnership with Regeneron (REGN, Buy, $480 PT), but this is overshadowed near-term by the announcement of the receipt of another Form 483 following a re-inspection of the manufacturing facility for Dextenza. Management has asserted that the observations are related to issues that could be addressed in a short timeframe, but with the PDUFA coming up in July, there is a potential for a delayed launch – which would materially affect our estimates,” surmises Leone.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Dane Leone is ranked #216 out of 4,568 analysts. Leone has a 71% success rate and garners 13.4% in his yearly returns. However, when recommending OCUL, Leone loses 13.2% in average profits on the stock.

TipRanks analytics indicate OCUL as a Buy. Based on 2 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on Ocular stock while 1 maintains a Hold. The 12-month average price target stands at $35.00, marking a nearly 359% increase from where the stock is currently trading.