Considerable strength remains visible among biotechnology stocks, as reflected by the one percent gain being posted by the iShares NASDAQ Biotechnology Index in pre-market trading Wednesday. Among the equities in focus today are troubled drug maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and small biopharmaceutical firm Relypsa Inc (NASDAQ:RLYP). Let’s take a look and see what the analysts have to say about VRX and RLYP.
Valeant Pharmaceuticals Intl Inc
Valeant shares are down nearly 3% in pre-market trading, after the company confirmed that it had received a notice of default from one of its bond holders, purportedly an entity called Centerbridge Partners L.P.
However, Rodman & Renshaw analyst Ram Selvaraju continued to stick with his bullish stand, reiterating a Buy rating on the stock, with a price target of $105, which represents a potential upside of 228% from where the stock is currently trading.
Selvaraju observed, “The notice of default does not accelerate any of Valeant’s indebtedness, and under the covenants Valeant currently has in place with its creditors, the company has 60 days to cure the condition that led to the default notice, namely the delay in the filing of its 2015 Form 10-K. Accordingly, we note that the default condition would be cured as long as Valeant files its Form 10-K by June 11, 2016. Since the company has previously repeatedly stated its intent to file the 10-K by the end of this month, we believe that it is highly unlikely that this notice would lead to an actual default.”
“Furthermore, as is doubtless the case with other creditors, we believe it is not in Centerbridge’s best interests to force the company into actual default. Accordingly, we believe that this recent development poses solely negative sentiment risk and that Valeant would be able to cure the default notice upon the filing of its 10-K later this month,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ram Selvaraju has a yearly average return of 2.6% and a 45% success rate. Selvaraju has a 13.5% average return when recommending VRX, and is ranked #872 out of 3,863 analysts.
Out of the 26 analysts polled by TipRanks, 8 rate Valeant stock a Buy, 13 rate the stock a Hold and 5 recommend a Sell. With a return potential of 90%, the stock’s consensus target price stands at $60.92.
In a research report published yesterday, Mizuho’s top analyst Irina Rivkind Koffler initiated coverage on shares of Relypsa, with a Neutral rating and price target of $22, which represents a slight downside potential from current levels.
Koffler emphasized her neutral stance on Relypsa, noting, “We were surprised by news of takeout interest. It is clear to us that Relypsa needs imminent financing, which may be driving the company to explore all of its options ahead of its competitor’s May 26 PDUFA. We think that peak Veltassa sales for hyperkalemia could optimistically approach the $700 million range over a 10-year period, and the launch curve is likely much slower than the one implied by consensus expectations. We think the company has minimal negotiating leverage and we see little upside to RLYP from here. If the takeout thesis fades, we expect a swift collapse to the stock to a range below $10.”
According to TipRanks.com, analyst Irina Rivkind Koffler has a yearly average return of 26% and a 52% success rate. Koffler has a -6% average return when recommending RLYP, and is ranked #18 out of 3790 analysts.
Out of the 13 analysts polled by TipRanks, 12 are bullish on Relypsa stock, while 1 is bearish. With a return potential of 75.5%, the stock’s consensus target price stands at $39.58.