Mizuho Securities Remains Positive on Valeant Pharmaceuticals Intl Inc (VRX) Despite Recent Setbacks

Mizuho Securities analyst Irina Rivkind Koffler rates stocks in the biotechnology sector and is one of the top 10 analysts rated on TipRanks. Today, Koffler reiterated a Buy rating on shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), with a $155 price target, despite weeks of steep losses due to concerns about the drugmaker’s business practices. 

Koffler observed, “We try to remain rational and reiterate our BUY rating. We understand the panic associated with the turnover of large shareholders, potential government investigations, and the threat of management replacement. That said, our DCF analysis of the business under catastrophic scenarios (using estimates below our official numbers) generates a per-share value of $100.”

Furthermore, “The company still has significant optionality, in our view. Valeant’s emerging markets business generated EBIT margins below 15% in 1H:15 and is a divestable unit, in our view. We estimate 2016 sales of $2.1B which includes contribution from recently acquired Amoun. If Valeant divests this entire segment for a 2.5-3.5x sales multiple (in line with other deals in the sector), then we could see an influx of $5.3-7.4B into the company, which could be used to rapidly de-lever the business.”

The analyst concluded, “The stock is no longer trading on fundamentals in our view. We look at a liquidation valuation in the extreme case that management is ousted and the business is put up for sale under distressed conditions. We conclude shares are undervalued and reiterate our BUY rating.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a total average return of 45.6% and a 68.1% success rate. Koffler has a 30.3% average return when recommending VRX, and is ranked #3 out of 3824 analysts.

Out of the 19 analysts polled by TipRanks, 13 rate Valeant Pharmaceuticals stock a Buy, 5 rate the stock a Hold and 1 recommends a Sell. With a return potential of 158%, the stock’s consensus target price stands at $200.12.


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