Valeant Pharmaceuticals Intl Inc Takes First Steps To Address Leverage: Canaccord

Canaccord analyst Neil Maruoka came out today with a few thoughts on Valeant Pharmaceuticals Intl Inc (NYSE:VRX), following the news that the drug maker will sell its Dendreon business for $820 million to Chinese conglomerate Sanpower. Valeant acquired Dendreon for $495 million in 2015, so the sale represents a 66% premium.

Maruoka wrote, “Valeant has taken its first significant steps towards de-levering its balance sheet, announcing the divestiture of Dendreon and several dermatology brands (including CereVe) for combined cash consideration of ~$2.1 billion. While we view these moves to be positive, we nonetheless believe that the announcements underscore the potential challenges ahead for the company within this process. The ability to achieve higher valuations probably will require giving up higher-growth products (in this case, CereVe, which has demonstrated >20% growth over the past two years); also, potential buyers may not be able to achieve the same synergies identified by Valeant when the assets were acquired. Following these divestitures, we estimate that Valeant will have total debt of $28.3 billion remaining, representing a leverage ratio of 6.9x forward EBITDA (down from 7.1x previously).”

As such, the analyst raised his price target to $19.00 (from $17.00), while reiterating a Hold rating on the stock.

According to, analyst Neil Maruoka has a yearly average return of -29.3% and a 22% success rate. Maruoka has a -32.6% average return when recommending VRX, and is ranked #4282 out of 4351 analysts.

Out of the 22 analysts polled by TipRanks, 5 rate Valeant Pharmaceuticals stock a Buy, 13 rate the stock a Hold and 4 recommend to Sell. With a return potential of 88%, the stock’s consensus target price stands at $30.83.


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