Valeant Pharmaceuticals Intl Inc (VRX) Looks To Pay Down $125M In Debt; Louise Chen Bullish


Valeant Pharmaceuticals Intl Inc (NYSE:VRX) announced today that it will pay down $125 million of senior secured loans, keeping it on track with its debt-reduction goals. The company said it used its cash on hand to pay off the loans.

When the debt is repaid later this week, the Company will exceed its August 2016 commitment to pay down $5 billion in debt from divestiture proceeds and free cash flow ahead of its previously stated timing of February 2018.

Valeant CEO Joseph Papa stated, “Due to strong operating cash flow, we are able to reduce our debt by an additional $125 million . This means we will not only surpass our goal of paying down $5 billion of debt, but also will exceed it earlier than our initially committed February 2018 timeframe […] We will continue to work on reducing our debt and executing on our strategy of investing in our core businesses that will drive growth and where we believe we can make the biggest impact on the lives of patients.”

Cantor analyst Louise Chen opined, “This is good news for VRX since we think that the company’s leverage ratio keeps some investors on the sidelines.” the analyst continued, “VRX was able to reduce its debt faster than expected because of its strong operating cash flows. We continue to believe that VRX can reduce its leverage ratio from ~7x to 4x-5x over the next several years, and that this should help drive VRX shares higher.”

As such, Chen reiterates a Buy rating on VRX stock, with a price target of $23, which implies an upside of 99% from current levels. (To watch Chen’s track record, click here)

Separately, yesterday, BMO’s Gary Nachman reiterated a Hold rating on the stock with a price target of $16.

Shares of Valeant are currently trading at $11.55, up $0.14 or 1.23%. VRX has a 1-year high of $24.30 and a 1-year low of $8.31. The stock’s 50-day moving average is $13.54 and its 200-day moving average is $13.74.

Sentiment on the street is mostly neutral on VRX stock. Out of 12 analysts who cover the stock, 6 suggest a Hold rating, 3 suggest a Sell and 3 recommend to Buy the stock. The 12-month average price target assigned to the stock is $21.50, which implies an upside of 83% from current levels.

Valeant engages in the development, manufacture, and market of a broad range of pharmaceutical products in the areas of dermatology, gastrointestinal disorders, eye health, neurology and branded generics. It operates through the following segments: The Bausch + Lomb/International, The Branded Rx, and The U.S. Diversified products.