Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) saw its shares falling nearly 10% today, after Dow Jones reported that talks to sell its Salix unit to Takeda have broken down. In addition, Valeant yesterday announced a sales force expansion to focus on potential PCP prescribers of Xifaxan in IBS-D and Relistor for opioidinduced constipation.
Mizuho analyst Irina Rivkind Koffler shares her essay on why she believes the expansion is a reasonable, but ultimately futile: “1) Xifaxan is an antibiotic, and is only taken for 14 days at a time for IBS-D. It is therefore unclear to us how much additional value these reps can add to the brand while competing against products like AGN’s Viberzi, which is taken chronically. 2) We currently model low single-digit growth for Xifaxan in 2017 and beyond, so additional promotion could improve this trajectory, but we don’t think by much. 3) Weekly TRxs for oral Relistor were 186 for the week ending Nov 18, and we also don’t expect a meaningful inflection in this brand from the headcount expansion, since we think a more appropriate target for this drug would be pain specialists. 4) It is unclear if this investment signals a terminated sales process for the Salix business, and concerns about this possibility could weigh on the stock. Mgmt indicated it has a fiduciary duty to evaluate offers but that its current focus for the GI franchise is to keep it and invest in it.”
As such, Koffler reiterated an Underperform rating on Valeant shares, with a price target of $11, which implies a downside of 30% from current levels.
Koffler is one of Valeant’s biggest bears, and she is also one of the top analysts rated who cover the stock. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Koffler has a yearly average return of 16.1% and a 48% success rate. Koffler has a 17.5% average return when recommending VRX, and is ranked #92 out of 4241 analysts.
Arrowhead Pharmaceuticals Inc
Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR) shares are collapsing, down around 65% at time of writing, after the company announced the the discontinuation of all of its clinical RNAi programs. Arrowhead will focus its research program on subcutaneous (subQ) and extra-hepatic programs ARC-LPA, ARC-AMG1, ARC-F12, ARC-HIF2, and previously unannounced subcutaneous programs for chronic hepatitis B virus (HBV) and alpha-1 antitrypsin deficiency (AATD).
In reaction, Cantor analyst Elemer Piros downgraded the stock from Buy to Hold, while slashing the price target to $1.00 (from $15), which reflects a potential downside of 40.5% from current levels.
Piros commented, “We are downgrading our rating on the shares to HOLD with a $1/share price target, based on our estimate of Arrowhead’s FY2017 yearend cash of $73.7 million. We are also reducing our estimate of the company’s cash burn rate, due to a planned workforce reduction of approximately 30%. We have narrowed our estimates of loss per share for the company, based on the discontinuation of Arrowhead’s clinical candidates and its workforce reduction.”
As usual, we like to include the analyst’s trackrecord when reporting on new analyst notes. According to TipRanks, analyst Elemer Piros has a yearly average return of 6.2% and a 46.5% success rate. Piros has a -22.1% average return when recommending ARWR, and is ranked #797 out of 4241 analysts.
Out of the 6 analysts polled by TipRanks, 3 rate Arrowhead stock a Buy, while 3 rate the stock a Hold. With a return potential of 465%, the stock’s consensus target price stands at $9.50.
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