Mizuho Sets Expectations on Valeant (VRX) Ahead of Earnings

Valeant (NYSE:VRX) is raring to deliver what Mizuho’s Irina Rivkind Koffler expects will be a solid second quarter print, with the potential for a guidance raise. However, the analyst believes the drug maker will need to address issues like the Duobrii CRL, and Uceris generic competition, which may temper some of the excitement around the story.

Koffler wrote, “We model 2Q:18 revenue of $2.11 billion and EPS of $0.80 vs. FactSet consensus estimates of $2.06 billion and $0.80, respectively. We expect $797 million in adjusted EBITDA in the quarter vs. $801 million consensus. While we expect generally strong results from Valeant, with potential to raise the 2018 revenue guidance range, we believe that management will also have to explain details around its Duobrii delay in psoriasis, update expectations for Uceris post-Teva generic launch, and discuss why Vyzulta prescriptions are slightly lagging Aerie’s Rhopressa. Xifaxan continues to perform well (total milligrams are +10.2% Y/Y April – May), and our recent deep dive into the compound suggests that there are multiple near-term and long-term growth opportunities for the brand which we think are underappreciated by the Street.”

Net net, Koffler reiterates a Buy rating on Valeant stock, with a price target of $31, which represents a potential upside of 31% from where the stock is currently trading. (To watch Koffler’s track record, click here)

How does Koffler’s bullish stance weigh up against the word of the Street? It appears other voices are not as willing to bet on drug maker, as TipRanks analytics demonstrate VRX as a Hold. Based on 13 analysts polled in the last 3 months, 5 rate a Buy on Valeant stock, 5 maintain a Hold, while 3 issue a Sell on the stock. The 12-month average price target stands at $22.20, marking a nearly 6% downside from where the stock is currently trading.

Valeant develops, manufacture and market a range of pharmaceutical, medical device and over-the-counter products, primarily in the therapeutic areas of eye health, gastroenterology and dermatology. 

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