Mizuho Slashes Price Target for Valeant Pharmaceuticals Intl Inc (VRX) to Reflect More Conservative Approach

In a research report released Friday, Mizuho Securities analyst Irina Rivkind Koffler reiterated a Buy rating on shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), while slashing the price target to $111 (from $155), on the back of an updated valuation methodology and more conservative numbers. Valeant shares are currently trading at $88.92, up $4.92 or 5.86%.

Koffler wrote, “We are by no means ignoring the risks tied to this stock. We worry about expansion of existing investigations, congressional probes of Philidor, and potential changes to senior management. All that said, we believe that the risk/reward in VRX is still favorable given business fundamentals. We are primarily taking down our numbers to eliminate amortization add-backs in the DCF as we have done for the other names under coverage but not wavering from our BUY thesis in VRX.”

“While we expect a negative impact to the company’s dermatology revenues after the demise of Philidor, we are also seeing an uptick in Jublia weekly prescriptions in the retail channel suggesting the migration of these prescriptions to more normalized distribution. We would expect gross-to-net discounts on these units to come down later in 2016 after the company ceases giving away free product to generate improved gross margins,” the analyst added.

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 43.6% and a 69% success rate. Koffler has a 26.1% average return when recommending VRX, and is ranked #3 out of 3857 analysts.

Out of the 20 analysts polled by TipRanks, 14 rate Valeant stock a Buy, 5 rate the stock a Hold and 1 recommends a Sell. With a return potential of 93%, the stock’s consensus target price stands at $170.82.

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