Valeant Pharmaceuticals Intl Inc (VRX): Analyst Louise Chen Provides Key Takeaways Following a Fireside Chat with CFO

CFO Paul Herendeen sought out to convince investors to put their money into the long game.


Cantor analyst Louise Chen is out with a research note on shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), following a fireside chat with CFO Paul S. Herendeen, which took place today at the Cantor Healthcare Conference in New York. The fireside chat focused on the company’s pipeline, ability to meet or exceed 2017 guidance and where numbers could go in 2018, as well as divestment of assets and right-siding of capital structure.

Chen wrote, “Management noted they are still very much looking to divest non-core assets if the price is right and can help delever the company. There are many opportunities to invest, but VRX has to balance those opportunities with its debt load. However, they see a role in having a meaningful amount of debt, and their target is to have more reasonably capitalized debt, with a real opportunity for shareholders to benefit from its leveraged capital structure. VRX also noted second half progress on earnings, with progression through 2017 partly from growth in its GI franchise and also assets like Relistor that are expected to perform better in 2H17.”

“Management also gave an update to its dermatology business, emphasizing that its agreement with Walgreens is valuable and Walgreens makes a great partner for its dermatology business. According to the company, the dermatology business is an example of an asset that was previously undermanaged, but with William Humphries’ hire, the company is positioned to take advantage of the opportunity and drive up the legacy business (with Siliq, IDP-118, etc.), in our opinion,” the analyst added.

Subsequently, Chen reiterates an Overweight rating on Valeant shares, with a price target of $23, which represents a potential upside of 63% from where the stock is currently trading. (To watch Chen’s track record, click here)

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Louise Chen has a yearly average return of -9.2% and a 41% success rate. Chen has a -56.1% average return when recommending VRX, and is ranked #4536 out of 4653 analysts.

Out of the 13 analysts polled in the past 12 months, 3 rate Valeant stock a Buy, 7 rate the stock a Hold and 3 recommend a Sell. With a return potential of 25%, the stock’s consensus target price stands at $17.83.