Healthcare analysts from brokerage firms BMO and Cantor are out today with commentary on troubled drug makers Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and TrovaGene Inc (NASDAQ:TROV), as both companies appointed new CEOs today. Let’s take a closer look.
Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals shares are up nearly 4% this morning, after the company announced the appointment of new CEO Joseph Papa, the former CEO of competitor Perrigo.
Reacting was BMO Capital analyst Alex Arfaei, which reiterated a Market Perform rating on the stock, with a price target of $66, which implies an upside of 79% from current levels.
Arfaei opined, “This is a meaningfully positive development for VRX. Mr. Papa is an accomplished industry veteran with more than three decades of Pharma executive experience. Moreover, he has led Perrigo through a number of acquisitions, including Elan in 2013, which was basically a tax inversion. In our view, Mr. Papa’s focus on buying consumer and OTC businesses is well aligned with Valeant’s M&A-focused strategy and key business units (e.g., Consumer, B+L). On the prescription drug side, Mr. Papa is accredited for overseeing a number of successful launches, including Celebrex, and this bodes well for the growth prospects of the Salix Xifaxan franchise, which we believe should be a key growth driver for Valeant. The performance of PRGO shares since Mr. Papa became CEO in 2006 has been excellent, in our view (up over 900% until the hostile offer by Mylan in 2015). ”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Alex Arfaei has a yearly average return of 5.2% and a 63% success rate. Arfaei has a -12.6% average return when recommending VRX, and is ranked #682 out of 3907 analysts.
Out of the 27 analysts polled by TipRanks, 10 rate Valeant stock a Buy, 12 rate the stock a Hold and 5 recommend a Sell. With a return potential of 104%, the stock’s consensus target price stands at $75.17.
TrovaGene announced that Bill Welch, former President and CEO of Sequenom from June 2014 to September 2015 is the newly appointed CEO of the company. In addition, the Company announced that Matthew Posard, the Company’s Chief Commercial Officer, has left the Company, sending shares down over 15%.
In reaction, Cantor analyst Bryan Brokmeier downgraded TrovaGene shares from Buy to Hold, while slashing the price target to $5.00 (from $9.00).
Brokmeier commented, “We view the completion of the CEO search and Bill Welch’s hire as positives. Mr. Welch led the commercialization of SQNM’s MaterniT21, which we view as one of the most successful diagnostic launches in history (though later ran into trouble as new competitors entered the market with less expensive tests). Moreover, SQNM’s MaterniT21 and TROV’s Precision Cancer Monitoring (PCM) Platform use similar methods for their respective diagnostic assays, which should provide Mr. Welch with a solid understanding of the underlying technology.”
“That said, the loss of Matt Posard, TROV’s Chief Commercial Officer, is a significant negative for the company. Though we believe that Mr. Welch’s commercialization experience should enable him to fill the loss of Mr. Posard, we are concerned that several other senior members of TROV’s commercialization team that joined the company with Mr. Posard from ILMN may also leave, creating a near-term risk to the continued commercialization of TROV’s diagnostic assays. Hence, we’re downgrading shares of TROV to HOLD, from BUY, and reducing our target price,” the analyst continued.
According to TipRanks.com, analyst Bryan Brokmeier has a yearly average return of 14.2% and a 61% success rate. Brokmeier has a 43.1% average return when recommending TROV, and is ranked #245 out of 3907 analysts.