Biotech Beat: Analysts Weigh in on Valeant Pharmaceuticals Intl Inc (VRX) and Celgene Corporation (CELG)

Valeant Pharmaceuticals Intl Inc

Wells Fargo analyst David Maris is out today with another bearish note on Valeant Pharmaceuticals Intl Inc (NYSE:VRX). In this episode, the analyst questions whether Valeant’s Wellbutrin XL sales growth is really increasing, while raising red flags about the company’s distributor partner.

Maris wrote, “How does Wellbutrin XL still show growth when it went generic in 2006 and currently has ten generic competitors, especially when prescription trends have shown a dramatic and steady decline (total monthly prescriptions have fallen from approximately 30,000 per month two years ago to approximately 16,000 in July 2016). Traditionally, brands facing this type of generic competition see erosion in the 90% range.”

The analyst continued, “A January 2016 Bloomberg article discussed this subject and raised the possibility that privately held Direct Success, Valeant’s specialty distributor partner for Wellbutrin XL, might hold the key. We decided to look into this further given the importance of Wellbutrin XL to Valeant’s sales base (it is the #2 product). As a result of our review, we conclude that the Wellbutrin XL distribution is unclear and more importantly, its pricing strategy is unsustainable.”

“In response to our questions Valeant indicated that Direct Success represents less than 5% of Wellbutrin XL sales, but Valeant could not confirm this holds true for Direct Success and all of Direct Success affiliated pharmacies. We are lowering our Wellbutrin XL sales forecasts, as detailed within,” Maris concluded

As such, Maris reiterated an Underperform rating on shares of Valeant with a valuation range of $17-$22.

According to analyst ranking service TipRank, analyst David Maris has a yearly average return of 3.5% and a 48% success rate. Maris has a 13.9% average return when recommending VRX, and is ranked #1221 out of 4180 analysts.

Out of the 15 analysts polled by TipRanks (in the past 3 months), 4 rate Valeant stock a Buy, 9 rate the stock a Hold and 2 recommend a Sell. With a return potential of nearly 74%, the stock’s consensus target price stands at $38.67.

Celgene Corporation

In a research report published Monday, Cowen top analyst Eric Schmidt reiterated an Outperform rating on shares of Celgene Corporation (NASDAQ:CELG) with a price target of $150, after the healthcare giant released the anticipated 12-week, Phase 1b endoscopy data for GED-0301 in Crohn’s disease that is being presented at UEGW (October 15-19, Vienna).

Schmidt commented, “We maintain that the results presented from this initial endoscopy study will be difficult to interpret due to the lack of a placebo control arm and limited historical data from endoscopy trials in Crohn’s. We are encouraged that a sizable proportion of patients in this study achieved a clinical response/remission, and that there appeared some evidence of dose response with the 12 week group performing best.”

“Celgene will host a conference call on Tuesday at 10am ET to place its GED-0301 results into context. We anticipate the call will compare and contrast its GED-0301 trial to that of filgotinib and others, and point out differences that make a cross trial comparison difficult. We believe investors are negatively positioned on GED-0301 into the UEGW presentation and expect the simple passage of this event to relieve some of the pressure on CELG shares as interest turns to other pipeline programs,” the analyst continued.

According to, 5-star analyst Eric Schmidt has a yearly average return of 22.7% and a 53.5% success rate. Schmidt has a -0.7% average return when recommending CELG, and is ranked #70 out of 4180 analysts.


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