Healthcare analysts at UBS and Brean Capital weighed in on the controversial drug giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and bio-pharmaceutical company Horizon Pharma PLC (NASDAQ:HZNP). The analysts reflect on Valeant’s 2016 outlook, and Horizon’s acquisition of Crealta Holdings.
Valeant Pharmaceuticals Intl Inc
In a research report released today, UBS analyst Marc Goodman reiterated a Buy rating on shares of Valeant, with a price target of $232, ahead of the company’s Investor Day on December 16, where it will provide updated financial guidance, discuss certain business operations and highlight certain R&D programs.
Goodman noted, “Based on conversations with investors and mgt it seems as though most expect the previous $7.5B EBITDA guidance to drop into the $6.5-7.0B range. We think the key pieces that drive changes to the numbers include: (1) lower derm sales to account for the transition period to a new specialty pharmacy network; (2) lower Marathon (Nitropress/Isuprel) sales because of lower pricing; (3) higher spending for employee retention; and (4) higher legal fees.”
The analyst concluded, “Expectations are so low that we think guidance with a midpoint in the range of $13.50 would be viewed positively if mgt does a good job of providing strong support for these numbers, which it usually does, and if investors understand that consensus EPS includes significant capital deployment.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Marc Goodman has a yearly average return of 12% and a 67.9% success rate. Goodman has a 13.7% average return when recommending VRX, and is ranked #305 out of 3618 analysts.
Out of the 21 analysts polled by TipRanks, 14 rate Valeant Pharmaceuticals stock a Buy, 6 rate the stock a Hold and 1 recommends a Sell. With a return potential of nearly 67%, the stock’s consensus target price stands at $157.19.
Horizon Pharma PLC
Brean Capital analyst Difei Yang came out today with a few insights on Horizon Pharma, after the company announced the acquisition of Crealta Holdings for $510 million in cash to expand its product portfolio and existing orphan business unit.
Yang commented, “We believe that the deal is accretive for several reasons: 1) $70-80M and $45-50M of additional revenues and adjusted EBITDA in 2016; 2) expands the orphan business unit — Actimmune, Ravicti, and Buphenyl — to improve its sales and margins; 3) integrates new and existing rheumatology sales forces to improve penetration into chronic refractory gout population; and 4) further diversifies the product portfolio. Management guided that the deal is to close in 1Q16.”
“We view the deal very positively; we thought the re-positioning of Krystexxa by Crealta to target gout refractory patients as a last line therapy made logical sense and, given Horizon’s track record in execution, we view the deal favorably,” the analyst concluded.
Yang reiterated a Buy rating on shares of Horizon Pharma, while raising the price target to $32 (from $31), which implies an upside of 70.5% from current levels.
According to TipRanks.com, analyst Difei Yang has a yearly average return of -3.8% and a 39% success rate. Yang has a 10.2% average return when recommending HZNP, and is ranked #3199 out of 3618 analysts.
Out of the 9 analysts polled by TipRanks in the last 3 months, 6 rate Horizon Pharma stock a Buy, 1 rates the stock a Hold and 1 recommends a Sell. With a return potential of 95.78%, the stock’s consensus target price stands at $37.14.