Valeant on Track to Meet $5 Billion Debt Reduction Commitments Ahead of Goal

In a bullish research note previewing second quarter earnings from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) due August 8th, Stifel analyst Annabel Samimy weighs in on the biotech giant’s recent asset sales, commending its steps towards “diligently” paying down its debt goals of $5 billion by the start of next year.

As such, finding the giant right “on track” to settle $5 billion debt reduction commitments even before the beginning of 2018, the analyst reiterates a Buy rating on shares of VRX with a $35 price target, which represents a 102% increase from where the stock is currently trading. (To watch Samimy’s track record, click here.)

Samimy explains, “With that goal in reach from additional divestitures and free cash flow, we turn all attention to the performance of its core franchises— Ophthalmology (B+L), Consumer, Dermatology, and GI—and prospects for stability and growth in the next 12-18 months. Based on prescription trends, results appear mixed, with GI starting to regain traction, but Dermatology still struggling to regain volumes. We expect stable growth within most of the B+L franchise and Consumer businesses. With the sale of Dendreon now closed and iNova pending in 2H17, we expect VRX to adjust guidance (Revenues $8.9-9.1bn/ EBITDA $3.6-3.75bn) to reflect their impact. Consensus appears to capture some of these adjustments already,” with consensus projecting $8.77 billion in revenues and $3.51 billion in EBITDA for the quarter.

Regarding Valeant’s recent sale of its Obagi Medical Products Business for $190 million in cash, the analyst concludes that the move is a sound one, considering “Obagi was not a business that could be leveraged within Dermatology and could not serve to stabilize the medical side of the business. Hence, divestiture made strategic sense.”

TipRanks analytics demonstrate VRX as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 3 are bullish on Valeant stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 1%, the stock’s consensus target price stands at $17.33.

To Say Vertex Outperformed Is the Understatement of the Day

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) has wowed across the Street today, sending shares rocketing almost 27% and leaving J.P. Morgan analyst Cory Kasimov “speechless” with bullish praise and wonder.

On back of the biotech firm’s release of triple combinations that were “highly impressive across the board” in both het min as well as F508del homozygous cystic fibrosis (CF) patients alike, the analyst reiterates an Overweight rating on VRTX while lifting the price target from $129 to $175, which represents a close to 5% increase from current levels. (To watch Kasimov’s track record, click here.)

The Phase I and Phase 2 updates for the firm’s triple combo regimens have left Kasimov exhaling, “Wow. Just wow. To say that the initial results for VRTX’s triple combinations released this afternoon beat expectations would be an understatement. […] The mean absolute improvements in ppFEV1 were Kalydeco-like or better, which represents the best case scenario. Success with the triple combo not only provides greater benefit to F508del homozygous patients who are already on Orkambi (and eventually VX-661), but importantly helps reach the untapped, difficult to treat het min patients (~24K patients). Not only does this data set up well to reach a large majority of the CF patient population, it greatly increases the competitive hurdle while also enhancing the scarcity value of the company.”

Not only did “FEV1 improvement easily beat prevailing expectations” but the analyst is also commending Vertex for the “favorable safety/tolerability profile” for the CF triple combos. Moving forward, the firm has intentions set to initiate triple combo pivotal studies with CF drugs VX-152 and/or VX-440 by the first half of next year. Meanwhile, Vertex is also dialing up development for VX-445 as well as VX-659, with VX-445 presently in a Phase 2 trial and a Phase 2 study anticipated to kick off by early August for VX-659 in het min and F508 del homozygous patients. Data read-outs for these Phase 2 trials are expected by the start of next year.

TipRanks analytics exhibit VRTX as a Strong Buy. Based on 17 analysts polled by TipRanks in the last 3 months, 16 rate a Buy on Vertex stock while 1 maintains a Hold. The 12-month average price target stands at $141.73, marking a 7% upside from where the stock is currently trading.