Analyst Irina Rivkind Koffler of Mizuho Securities recently commented on the overall biotech industry, highlighting several companies. Among them were Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Horizon Pharma PLC (NASDAQ:HZNP). The analyst remains on the sidelines for Valeant, citing uncertain deals, executive turnover, and a possible tax increase. However she is bullish on Horizon thanks to its product success. Irina Rivkind Koffler is ranked #4 out of 3,675 analysts on TipRanks. She has a 63% success rate recommending stocks with an average return of 37.3% per recommendation.
Valeant Pharmaceuticals Intl Inc
The analyst weighed in on Valeant with neutral sentiment, citing “cloudier growth prospects” relative to its peers. The analyst points to only 1% terminal growth as a result of $700 million worth of legal fees from pending investigations. Related, the possibility of new investigations, as well as pending ones related to Philidor, can send shares tumbling and impact her own estimates. However, she states that management has efficiently dealt with each scandal, “rebuilding credibility.”
Koffler believes that recent shakeups in senior management, particularly CEO Pearson’s departure, “represents a risk at this time,” with the possibility of interim CEO Howard Schiller resigning. Should this happen, “it is unclear who else would be willing to take on the clean-up of this business.” Another unclear factor for the company is its Walgreens agreement, which may not “generate additional growth to offset the closing of the Philidor channel.”
The analyst also notes a possibility that the company’s tax rate will increase as a result of its OECD proposals, which will affect all multinational enterprises. The company’s low tax rate “is a key competitive advantage” and Koffler is keeping an eye on this development. In terms of acquisition, Koffler states that Valeant may fail to generate investor confidence in new acquisitions, and existing ones “may under-perform expectations.” She concludes by expressing bearishness on the company’s emerging market segment, about 20% of its total revenue, due to international conflicts and Russian economic declines.
On January 25, 2016, Koffler reiterated her Neutral rating with a $112 price target. According to TipRanks’ statistics, out of 20 analysts who have rated the company in the past 3 months 11 gave a Buy rating while 9 remain on the sidelines. The average 12-month price target for the stock is $155.41, marking a 68% upside from where shares last closed.
Horizon Pharma PLC
Koffler weighed in on Horizon Pharma, noting that the company is poised for growth due to the “durability of the primary care products as well as the company’s Orphan portfolio.” She’s also bullish on its acquisitions, as the company updated 2016 guidance and aims to generate further revenue by entering 2-4 deals per year.
She cites some risks the company could face, such as stronger than expected payer pressure, which could result in heavy discounting. Related, the company could miss estimates, further driving down the stock. Although acquisitions have been successful, HZNP “may fail to identify attractive acquisition targets or investors may not appreciate the acquisition targets selected by the company.” Other risks include “government pricing pressure,” overpayment of Orphan assets, and the “Clinical risk associated with the Actimmune Friedreich’s Ataxia program.”
Despite these risks, the analyst maintained a Buy rating and $36 price target on shares on January 25, 2016. According to TipRanks’ statistics, out of the 9 analysts who have rated the company in the last 3 months, 7 gave a Buy rating, 1 gave a Sell rating, and 1 remains on the sidelines. The average 12-month price target between these 9 analysts is $34.25, marking an 86% potential upside from current levels.