Today, shareholders of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) woke up to a nice 7% pop in the value of their shares, after the drug maker announced it has entered into an agreement to sell its iNova Pharmaceuticals (“iNova”) business to a company jointly owned by funds advised and managed by Pacific Equity Partners and The Carlyle Group for $930 million in cash.
“The sale of iNova is part of the company’s ongoing efforts to both simplify our operating model and strengthen our balance sheet,” said Joseph C. Papa, chairman and chief executive officer, Valeant. “We will continue to evaluate opportunities that will enable us to deliver on our commitments and unlock value for shareholders.”
iNova, which markets a diversified portfolio of prescription and over-the-counter products in several areas, such as weight management, pain management, cardiology and cough and cold, operates in more than 15 countries around the world. iNova holds leading market positions in Australia and South Africa and also has an established platform in Asia. Valeant will maintain a strong footprint in these countries primarily through its Bausch + Lomb franchise.
Valeant will use proceeds from the sale to permanently repay term loan debt under its Senior Secured Credit Facility. The transaction is expected to close in the second half of 2017, subject to customary closing conditions, including receipt of applicable regulatory approvals.
On the ratings front, Valeant has been the subject of a number of recent research reports. In a report issued on May 19, Deutsche Bank analyst Gregg Gilbert maintained a Hold rating on VRX, with a price target of $18, which represents a potential upside of 48% from where the stock is currently trading. Separately, on the same day, Wells Fargo’s David Maris maintained a Sell rating on the stock.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gregg Gilbert and David Maris have a yearly average loss of 3.1% and a return of 6.4% respectively. Gilbert has a success rate of 42% and is ranked #4016 out of 4569 analysts, while Maris has a success rate of 51% and is ranked #1247.
Sentiment on the street is mostly neutral on VRX stock. Out of 14 analysts who cover the stock, 9 suggest a Hold rating , 3 suggest a Sell and 2 recommend to Buy the stock. The 12-month average price target assigned to the stock is $21.50, which represents a potential upside of 77% from where the stock is currently trading.
Valeant Pharmaceuticals International, Inc. engages in the development, manufacture, and market of a broad range of pharmaceutical products in the areas of dermatology, gastrointestinal disorders, eye health, neurology and branded generics. It operates through the following segments: The Bausch + Lomb/International, The Branded Rx, and The U.S. Diversified products.