Biotech Beat: Analysts Weigh in on Valeant Pharmaceuticals Intl Inc (VRX) and Relypsa Inc (RLYP)

It may be a quiet week for analysts as the New Year approaches, but many are still eager to get their last ratings in before the ball drops. Today, analysts weigh in on Valeant Pharmaceuticals Intl Inc (NYSE:VRX) following news that its CEO has been hospitalized, and Relypsa Inc (NASDAQ:RLYP) in light of Veltassa’s commercial launch.


Valeant Pharmaceuticals Intl Inc

Irina Rivkind Koffler of Mizuho Securities reiterated her Neutral rating on Valeant Pharma today with an unchanged price target of $130 after the company confirmed that its CEO, Mike Pearson, is in the hospital with severe pneumonia.

Koffler notes that management does not expect Pearson’s current absence to take a toll on operations since he previously scheduled an absence over the holiday period. However, the analyst continues “to monitor the situation, but note that we still see an unfavorable risk / reward to buying the shares given what we see as uncertainties associated with the company’s growth forecast, coupled with its investigation / headline / management risk.” She concludes, “We reiterate our Neutral rating and expect more volatility in the stock until there is a favorable update on Mr. Pearson’s condition.”

Koffler stat

Koffler is a top ranked analyst with a 73% success rate recommending stocks in the healthcare sector and a 44.6% average return per rating. According to TipRanks, 13 analysts are currently bullish on Valeant, 1 is bearish, and 8 remain neutral. The average 12-month price target between these 22 analysts is $164.06, marking a 44% potential upside from where shares last closed.


Relypsa Inc

Mara Goldstein of Cantor Fitzgerald reiterated a Buy rating today on Relypsa with a $42 price target in light of Veltassa’s official launch. Veltassa treats hyperkalemia, or elevated potassium levels, and is the first drug in this class in the last 50 years.

The analyst explains, “Veltassa has officially launched, and we continue to believe the market will evolve to a meaningful commercial opportunity. We expect 2016 sales to be back-end loaded and think the combination of this and scrutiny on prescription trends could exacerbate volatility. Nonetheless, we like the shares, believing Veltassa is an underpriced asset with potential to drive valuation expansion.”

Goldstein added that Veltassa’s success will be more measurable when prescription data becomes available, as well as reimbursement data, throughout 2016. Short-term, the analyst points out that there is high awareness regarding the drug amongst physicians, boding well for sales. So far, the sales team for the drug has made 8,000 calls since the drug was approved, which Goldstein believes is a “solid start, particularly since the level of awareness of Veltassa prior to approval was at a reasonably high level.”

Goldstein stat

Goldstein has a 50% success rate recommending stocks with a +0.3% average return per rating. According to TipRanks, 8 analysts are bullish on the company while 1 is bearish. The average 12-month price target between these 9 analysts is $45.44, marking a 57% upside from current levels.

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