Are Things Looking Up for Valeant Pharmaceuticals (VRX)?


After June, you won’t have Valeant (NYSE:VRX) to kick around anymore. The Canada-based drug company will be changing its name to Bausch Health Companies, trading under the ticker BHC, and symbolically, at least, leaving its troubled past behind.

Will it help? RBC Capital analyst Douglas Miehm‘s views on Valeant remain largely unchanged. The analyst sees few negative catalysts over the next six months, with guidance increases likely. However, as downside outweighs upside and given recent share price appreciation, the analyst remains sidelined on the stock.

Miehm reiterates a Sector Perform rating on VRX, while boosting the price target to $25 (from $19), which implies an upside of 8% from current levels. (To watch Miehm’s track record, click here)

Miehm wrote, “In our view, 2018 guidance (specifically EBITDA of $3.15–3.30B) remains conservative. As a result, we believe Street estimates for both ’18/’19 ($3.22B/$3.29B) are too low and see room for upward revisions. Management has noted that Q1/18 would be a trough quarter. Q1 is generally the weakest quarter of the year; as such, our outlook continues to forecast a sequential rise in EBITDA.”

“Following the Duobrii CRL, we anticipate few potentially negative news flow items for the company in H2/18. Nevertheless, potential Uceris and/or Apriso generics (expected H2/18– H2/19) and significant Duobrii delays (>6–9 mos.) may drive volatility in shares. On the pipeline front, notable PDUFAs include Altreno (Aug. 27) and Bryhali (Oct. 5),” the analyst added.

Net net, “Although we are becoming more comfortable on valuation, we note that execution risk remains high, especially as it pertains to new launches. As a result, we would revisit our neutral stance should valuation provide a better entry point.”

Wall Street tends to side with this Miehm’s apprehensive attitude toward the stock, as TipRanks analytics exhibit VRX as a Hold. Out of 13 analysts polled in the last 3 months, 5 are bullish on Valeant stock, 5 remain sidelined, while 3 are bearish on the stock. With a downside potential of nearly 6, the stock’s consensus target price stands at $21.80.

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