Canaccord Sees Valeant Pharmaceuticals Intl Inc (VRX) as Challenged for Growth

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) posted a third-quarter print yesterday that was decent in terms of revenue, but found itself missing when it came to the bottom line. Canaccord analyst Neil Maruoka finds Valeant “challenged for growth” in his assessment of the troubled biotech giant and therefore reiterates a Hold rating on shares of VRX while slicing the price target nearly in half from $33 to $17.

Some of these challenges arise from “ongoing pricing pressure” and a pull-back on year-over-year unit volume growth in dermatology. Meanwhile, the giant recently received an FDA Warning Letter in reaction to the agency’s inspection of VRX’s manufacturing facility in Rochester, New York. Pile on a three-month brodalumab PDUFA date delay for the drug approved to treat moderate-to-severe plaque psoriasis and debt load that continues to weigh heavily, Maruoka remains sidelined. Though VRX has pinpointed non-core assets circling approximately $8 billion that it could de-lever, Maruoka is skeptical as to whether “these valuations are achievable.”

The analyst explains, “In and of itself, we did not feel that the quarter was terrible; however, the company updated its 2016 financial guidance to a level well below consensus expectations. What’s more, on the conference call, management indicated that 2017 revenue and EBITDA should be lower on a sequential basis. While the 2016 guidance revision was widely expected, both the magnitude and spill-over into next year was not, and we believe investors are now fleeing the stock as the path to growth has grown murkier.”

“With this kitchen sink quarter, the company has pressed the reset button on financial performance expectations; however, we continue to see too many risks on the road to recovery to allow us to recommend investors buy the stock,” Maruoka contends.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Neil Maruoka is ranked #4,053 out of 4,186 analysts. Maruoka has a 9% success rate and confronts a 44.5% loss in his annual returns. When recommending VRX, Maruoka forfeits 38.9% in average profits on the stock.

TipRanks analytics indicate VRX as a Hold. Out of 10 analysts polled by TipRanks, 20% are bullish on Valeant stock, 60% remain sidelined, and 20% are bearish on the stock. With a return potential for 79%, the stock’s consensus target price stands at $26.83.screen-shot-11-09-16-at-06-01-pm

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts