In the biotech-verse, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Biocept Inc (NASDAQ:BIOC) are in opposite standing. According to one of the best analysts on the Street, who has lately been zooming in with a vengeance on the troubled biotech giant, Valeant has been weakened by curtailed revenues and a pipeline that simply might not be enough to offset surmounting challenges. Conversely, following strong fourth quarter results and on back of an excellent 2016, another analyst is encouraged on Biocept’s short-term as well as long-term success. Let’s dive in:
Reasons to Sell Valeant
As far as top analyst Irina Rivkind Koffler at Mizuho sizes up Valeant, Xifaxan, the troubled biotech giant’s irritable bowel syndrome with diarrhea (IBS-D) drug, VRX’s main spotlight for the year does not offer high expectations. In fact, even considering added time to repay debt, “fundamentals remain weak,” says Koffler, who highlights urgency to sell the stock.
Therefore, the analyst reiterates an Underperform rating on shares of VRX with a $9 price target, which represents a 23% downside from current levels.
“We expect revenue will continue to decline and model a wind-down in OpEx as the company divests assets and focuses on debt repayment. We think management will continue to guide down 2017 as assets are sold off and interest expense rises. Reasons we remain negative include: 1) In its 10-K filing Valeant notes that it stands to lose ~19% of its 2016 revs to generic competition in the 2017-2021 period. 2) Valeant faces worsening gross-to-net discounts (41% in 2016, up from 34% in 2015), and can’t make it up on price, in our view. 3) The pipeline may be insufficient to fill in the gaps, (e.g., management guided to an anemic $100M in 2017 contribution from new launches) and management keeps changing its growth drivers in investor presentations, moving from Xifaxan in HE in 2016, to Siliq in psoriasis in 2017, which feels unrealistic to us yet again. […] We had to lower longer term investment in the business to keep valuation at this level,” Koffler surmises.
For the fourth quarter, Valeant posted $2.4 billion in revenue and $1.26 in non-GAAP EPS, compared to consensus of $2.34 billion for revenue and $1.20 for non-GAAP EPS. For the financial year of 2017, VRX management guided to revenue of $8.9 to $9.1 billion and adjusted EBITDA of $3.55 to $3.70 billion.
Irina Rivkind Koffler has a very good TipRanks score with a 53% success rate and a high ranking of #85 out of 4,513 analysts. Koffler gains 20.6% in her annual returns. When recommending VRX, Koffler garners 23.5% in average profits on the stock.
TipRanks analytics demonstrate VRX as a Hold. Out of 13 analysts polled by TipRanks in the last 3 months, 2 are bullish on Valeant stock, 8 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 47%, the stock’s consensus target price stands at $17.18.
More stocks covered by top performing analysts can be found here.
Biocept Emerging Leader in Liquid Biopsy Market
Biocept shares are currently rising 18% in pre-market trading today following a robust fourth-quarter print released yesterday evening. Roth Capital analyst Chris Lewis cheers not just the fourth quarter, with “record revenues” that outclassed expectations, thanks to billable sample volume that surged 78% year-over-year, but in general praises 2016 as a whole for the firm. In reaction, the analyst reiterates a Buy rating on BIOC while lifting the price target from $1.60 to $3, which represents a 12% increase from where the stock is currently trading.
Lewis asserts, “BIOC continues to report steady commercial momentum as it further builds upon its emerging leadership position in the liquid biopsy market […] In addition, management reiterated its expectation for (1) the transition from cash to accrual revenue recognition in mid-2017 and (2) positive gross margins in 2H17. All in, we come away positive on the quarter and remain bullish on BIOC going forward.”
“Looking ahead, we see a number of value-creation catalysts over the coming quarters that should allow BIOC to continue to build on its emerging leadership position in the liquid biopsy market,” notes the analyst, bullish on Biocept’s future prospects.
Overall, “We expect continued strong commercial momentum, along with a number of value-creation drivers […] will continue to support share appreciation,” Lewis concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Chris Lewis is ranked #657 out of 4,513 analysts. Lewis has a 52% success rate and realizes 6.8% in his yearly returns. When recommending BIOC, Lewis yields 91.0% in average profits on the stock.
Additionally, Ben Haynor of Feltl rates a Buy on BIOC with a $1.55 price target and Ram Selvaraju of H.C. Wainwright rates a Buy with a $2.25 price target.