Valeant Pharmaceuticals Intl Inc (NYSE:VRX) posted first quarter financial results yesterday for the year that might prove the once-sinking ship might have found its way to safer waters at last. Canaccord analyst Neil Maruoka stays cautious, but optimistic to see some promising hints of recovery. Investors clearly recognize potential for the troubled biotech giant to make a comeback as well, as shares rose 24% yesterday.

However, considering divesting continues to be an uphill battle for the giant, the analyst reiterates a Hold rating on VRX with a price target of $12, which aligns with where the shares last closed.

What threw everyone for a loop came down to a nice outlook upgrade, as the analyst points out, “Positive (but modest) guidance bump was unexpected,” attributing the slight 2017 adjusted EBITDA guidance predominantly to lesser cutthroat generic rivalry in 2017 up until now. However, the analyst is not counting out the possibility that because the impact of declared divestitures has not been calculated so far, guidance may ultimately face a cut down once again. The real challenge comes down to that even in face of encouraging divestitures, there remains difficulty in obtaining accretive multiples while holding onto key assets that drive growth for the giant.

“Although quarterly revenue was down 11% on a year-over-year basis, we believe the company is beginning to show signs of stabilization in key franchises including derm and Xifaxan. Driven by strong international volumes, Bausch & Lomb grew 4% on a constant currency basis. And, while the Branded Rx segment did see modest YoY declines, ASPs within the dermatology business showed signs of steadying. Moreover, while prescription volumes for Xifaxan were weaker in Q1, management indicated that this drug was again gaining market share in Q2 with the stabilization of the Salix sales force. Although we view these signs as positive, we will need to see additional evidence of accretive asset sale valuations and organic growth before we can become more constructive on the name,” Maruoka surmises.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Neil Maruoka is ranked #4,051 out of 4,563 analysts. Maruoka has a 37% success rate and faces a loss of 2.7% in his yearly returns. When suggesting VRX, Maruoka forfeits 29.8% in average profits on the stock.

TipRanks analytics show VRX as a Hold. Based on 14 analysts polled by TipRanks in the last 3 months, 2 rate a Buy on Valeant stock, 9 maintain a Hold, while 3 issue a Sell. The 12-month average price target stands at $14.60, marking a 21% upside from where the stock is currently trading.