Canaccord analysts weighed in today on drug maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and healthcare software firm Castlight Health Inc (NYSE:CSLT), as both stocks were among the top performers today. Let’s take a closer look:
Valeant Pharmaceuticals Intl Inc
Finally, Valeant investors have some relief after the company stuck by its financial forecast for the year and said it would unveil a new strategy, sending shares up 19% Tuesday.
Valeant released its second-quarter results, posting revenue of $2.4 billion, slightly lower than consensus of $2.5 billion. In addition, 2016 revenue is expected to be in the range of $9.9 billion to $10.1 billion; adjusted EBITDA is guided to be $4.80 billion to $4.95 billion; and adjusted EPS is expected to be $6.60 to $7.00.
Canaccord analyst Neil Maruoka commented, “Valeant reported second quarter results that were a slight miss on the bottom line. While Q2 challenges were as expected, we do note that management is making progress turning around the business. Valeant has identified assets it values at ~$8 billion as possible divestitures, and also outlined a plan to pay down ~$5 billion of debt over the next 18 months through FCF generation and non-core asset sales. Nonetheless, we believe that new CEO Joseph Papa must continue to build credibility during the early stages of his tenure, and investor confidence can only be fostered through execution and delivery of targets.”
Maruoka reiterated a Hold rating on VRX, with a price target of $28, which represents a potential upside of nearly 7% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Neil Maruoka has a yearly average return of -36.4% and a 16% success rate. Maruoka has a -38.9% average return when recommending VRX, and is ranked #4014 out of 4105 analysts.
Out of the 26 analysts polled by TipRanks, 8 rate Valeant stock a Buy, 13 rate the stock a Hold and 5 recommend a Sell. With a return potential of 134%, the stock’s consensus target price stands at $61.62.
Castlight Health Inc
Shares of Castlight Health jumped over 30% today after the company reported second-quarter results, posting revenues of $23.6 million that came in ahead of consensus estimate of $23.1 million, and ahead of the previously provided guidance range of $22.8M-$23.1M. Non-GAAP gross margin of 66.3% beat consensus estimate of 61.0%, showing a solid 800 bps improvement over 2Q’15.
However, Canaccord analyst Richard Close remains sidelined, reiterating a Hold rating, with a $5.00 price target, noting, “We maintain our HOLD rating on shares of CSLT following a decent 2Q’16 with slight revenue upside and respectable margin improvement ahead of our forecast. Despite cash flow breakeven anticipated for next year and a couple new large customers getting added in 2Q the company continues to work on shortening the sales cycle and implementation timeline. We look to gain additional data points before we get more constructive on the stock.”
According to TipRanks.com, analyst Richard Close has a yearly average return of 5.6% and a 52% success rate. Close is ranked #678 out of 4105 analysts.
Out of the 6 analysts polled by TipRanks, 5 rate Castlight Health stock a Hold, while 1 rates the stock a Buy. With a return potential of 32.3%, the stock’s consensus target price stands at $5.77.