All Eyes on Valeant (VRX) 1Q:18 Earnings This Morning

H.C.


Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is raring to dish up its first quarter print for the year this morning to a Wall Street watching this comeback kid of the biotech-verse with apprehension.

H.C. Wainwright analyst Ram Selvaraju surveys the challenged biotech giant from the sidelines, angling for a quarter of dipping growth.

Ahead of the print, the analyst reiterates a Neutral rating on VRX stock with a $16 price target, which implies a 13% downside from current levels. (To watch Selvaraju’s track record, click here)

“We are anticipating a sequentially down quarter, with $1.94B in top-line revenue and roughly $1.3B in operating expenses. However, we are looking for signs that Valeant is making progress towards turning its core divisions onto a growth trajectory, while investors should be aware that later this year the focus should be increasingly aimed at new product launches that begin to offset the previous negative impact of losses of exclusivity on legacy brands,” highlights Selvaraju.

Meanwhile, the analyst sees an “upcoming PDUFA date [just] around the corner” for the company with its PLENVU bowel prep product candidate; a drug that “still constitutes part of Valeant’s late-stage pipeline and its regulatory fate should simply be construed as a read on the company’s efficiency in getting applications over the finish line at the FDA.” The agency is primed to assess PLENVU this Sunday.

Regarding generics competition, Selvaraju notes that the company’s “Relistor injection patent validity [was] upheld” in the U.S. District Court, a ruling that holds off generic rivalry in the domestic ring for the next six years. In the next trial set for June 4th, the court will rule on the infringement and validity of additional patents that could stall generic Relistor vials between now and 2029 and generic Relistor syringes until 2030.

“While we regard the injection-based formulation of Relistor as a comparatively niche product, we consider this recent summary judgment result simply evidence that Valeant can still effectively defend its patent estate,” surmises Selvaraju.

TipRanks suggests caution hovers above this beleaguered biotech giant. Out of 11 analysts polled in the last 3 months, only 3 are bullish on VRX, 6 remain sidelined, while 2 are bearish on the stock. With a loss potential of 2%, the stock’s consensus target price stands at $17.72.  

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