Mizuho Remains Bullish on Valeant (VRX) Shares Following FDA Setback

Valeant (NYSE:VRX) shares are dipping 6% in early trading Monday, after the drug maker announced that it has received a Complete Response Letter (CRL) from the FDA regarding the company’s New Drug Application (NDA) for DUOBRII™1 lotion in the treatment of plaque psoriasis. The company noted that the CRL did not specify any deficiencies related to clinical efficacy or safety, or raise any issues related to manufacturing, but did have questions regarding pharmacokinetic data.

Mizuho analyst Irina Rivkind Koffler commented, “Valeant was planning to launch the drug in late 2018 and we only modeled $4M in 2018 revs, so don’t expect this setback to impact 2018 guidance. We estimate Duobrii sales of $175M in 2022, and think this estimate is still achievable if Valeant can rapidly address FDA questions. Duobrii is highlighted as one of the company’s “significant seven” and is expected to play a large role in mgmt’s goal of doubling its derm business over the next 5 years. Therefore, we would expect some weakness in the stock associated with the delay disappointment. The August 27 Altreno PDUFA in acne is the next potential key catalyst for the stock.”

As such, Koffler reiterates a Buy rating on Valeant shares, with a price target of $27, which represents a potential upside of 8% 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 Irina Rivkind Koffler has a yearly average return of 13.4% and a 48% success rate. Koffler has a 7.6% average return when recommending VRX, and is ranked #390 out of 4831 analysts.

The market has divided itself into two camps. The bulls argue that the worst is behind Valeant as it started focusing on getting the business growing, while reducing debts. The bears argue that the market is too optimistic about Valeant’s recovery, which could take a long, long time.

If we turn to the Street in general, we can see that the stock has a Hold analyst consensus rating. In the last three months, Valeant has received 5 buy, 4 hold and 4 sell ratings. These analysts have an average price target on the stock of $21.55, which implies about 20% downside from current levels. 


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