Healthcare Business

Do Analysts See an Inflection Point in Valeant Pharmaceuticals After Earnings?

Chris Lange

Valeant Pharmaceuticals International Inc. (NYSE: VRX) shares hit a new multiyear low this week after the company reported earnings on Tuesday. This company has taken the long way down over the course of the past year (shares down 90%), but despite this track record some analysts are holding out. Seemingly some are calling for an inflection point, while others are taking a relatively neutral stance on the stock.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying after this discouraging performance.

The company posted $1.27 in earnings per share (EPS) on $2.37 billion in revenue for the quarter. The consensus estimates had called for $1.37 in EPS on revenue of $2.38 billion. In the same period of last year, Valeant reported EPS of $2.36 and $2.19 billion in revenue.

In its Developed Markets segment, revenues increased $186 million, primarily from the acquisitions of Salix Pharmaceuticals and certain assets of Dendreon and their subsequent growth under Valeant’s ownership of $513 million, primarily offset by declining volumes in the neurology portfolio and lower volumes in dermatology of $208 million.

As for the Emerging Markets segment, revenues grew $15 million, primarily from the acquisition of Amoun Pharmaceutical for $59 million, partially offset by a negative foreign currency exchange impact.

Earnings were not what cratered the stock in Tuesday’s session though. Instead it was the outlook. In terms of guidance for the 2016 full year, the company expects EPS in the range of $6.60 to $7.00 and revenues to between $9.9 billion and $10.1 billion. Consensus estimates had called for EPS of $8.47 on revenue of $10.86 billion for the full year.

A few analysts weighed in on Valeant following the earnings report:

  • BTIG Research reiterated a Neutral rating.
  • JPMorgan reiterated a Buy rating.
  • RBC Capital has a Sector Perform rating and lowered its price target to $33 from $58.
  • Guggenheim reiterated a Buy rating with a $55 price target.
  • BMO Capital Markets reiterated a Hold rating and lowered its target to $38 from $44.
  • Jefferies reiterated a Buy rating and lowered its price target to $40 from $53.
  • Stifel has a Buy rating but lowered its price target to $55 from $65.
  • Rodman & Renshaw has a Buy rating but cut its price target to $90 from $102.
  • Susquehanna has a Neutral rating and lowered its price target to $25 from $35.

Shares of Valeant closed Wednesday down about 3% at $23.92, but the stock was up about 1% at $24.15 just after Thursday’s opening bell. The consensus analyst price target is $57.53, and the 52-week trading range is $22.52 to $263.81.