Close watch, $VRX @ 13.06
Why Analysts Are Looking at Valeant Pharma Differently After Earnings
[24/7 Wall St.]
Chris Lange
24/7 Wall St.March 4, 2017
Valeant Pharmaceuticals International Inc. (VRX) saw its shares hit a multiyear low this past week. There was hope for a turnaround when Joe Papa took over as chief executive officer, but it seems that little has gone his way, especially after the company reported earnings early this week. Some analysts took this opportunity to reevaluate their stance on the stock. Although this might be a buy for some, the returns look to be getting smaller.
The company said that it had $1.26 in earnings per share (EPS) and $2.4 billion in revenue. The consensus estimates from Thomson Reuters had called for $1.21 in EPS and revenue of $2.34 billion. The same period of last year reportedly had EPS of $2.50 on $2.79 billion in revenue.
ALSO READ: Wedbush Has 3 Biotech Stocks to Buy With Massive Upside Potential
The decrease in revenues for the quarter was primarily driven by a reduction in product sales from the existing business of $310 million and the negative impact of foreign currency exchange of $43 million. Revenues in the quarter were further affected by a drop in realized pricing by 3%, along with divestitures and discontinuations of $16 million.
In terms of guidance for the 2017 full year, the company expects to see revenues in the range of $8.90 billion to $9.10 billion with an adjusted EBITDA between $3.55 billion and $3.70 billion. The consensus estimates are $4.76 in EPS and $8.97 billion in revenue for the full year.
ALSO READ: RBC Says These Top Health Care Stocks Could Be 2017 Takeover Candidates
Jefferies looked at the data and maintained its Buy rating but cut its price target by roughly 18%. The firm lowered its price target to $18 from $22, and it wasn’t the only one being cautious.
A few other firms followed suit:
BTIG reiterated a Neutral rating.
BMO Capital Markets reiterated a Market Perform rating but lowered its price target to $19 from $21.
JPMorgan has a Hold rating with a $15 price target.
RBC lowered it price target to $21.
Apart from these, Jefferies detailed the reasoning in its report:
ALSO READ: Large Cap Biotech Stocks to Buy May Be the Cheapest in Years
Mgt’s rev outlook ($8.9-9.1B) bracketed consensus. However, adj EBITDA is expected to be in the range of $3.55-3.70B (vs $3.88B consensus) as Valeant plans to further invest in its R&D pipeline and step up promotion to drive longer term value for its key GI franchises (40% increase in reps). As such, adj EBITDA margin should dip to 40.3% (midpoint of guidance) vs 45.7% in FY16. Mgt appears to be of the view that the loss of exclusivities (LOEs) on drugs such as Solodyn and Acanya can be offset by new launches (Siliq, Vyzulta, etc.) with the implication that FY17 could be a “trough” year prior to the potential re-emergence of growth in FY18 and beyond. We cut our FY17 & FY18 rev & EPS estimates to $8.92B & $3.88 and $8.88B & $4.17 (vs $9.08B & $4.95 and $9.12B & $5.37).
ALSO READ: Fiat Continues Disappearing Act as Sales Plunge
Shares of Valeant closed Friday down 5% at $13.06, with a consensus analyst price target of $21.34 and a 52-week trading range of $12.90 to $70.43.
Why Analysts Are Looking at Valeant Pharma Differently After Earnings
[24/7 Wall St.]
Chris Lange
24/7 Wall St.March 4, 2017
Valeant Pharmaceuticals International Inc. (VRX) saw its shares hit a multiyear low this past week. There was hope for a turnaround when Joe Papa took over as chief executive officer, but it seems that little has gone his way, especially after the company reported earnings early this week. Some analysts took this opportunity to reevaluate their stance on the stock. Although this might be a buy for some, the returns look to be getting smaller.
The company said that it had $1.26 in earnings per share (EPS) and $2.4 billion in revenue. The consensus estimates from Thomson Reuters had called for $1.21 in EPS and revenue of $2.34 billion. The same period of last year reportedly had EPS of $2.50 on $2.79 billion in revenue.
ALSO READ: Wedbush Has 3 Biotech Stocks to Buy With Massive Upside Potential
The decrease in revenues for the quarter was primarily driven by a reduction in product sales from the existing business of $310 million and the negative impact of foreign currency exchange of $43 million. Revenues in the quarter were further affected by a drop in realized pricing by 3%, along with divestitures and discontinuations of $16 million.
In terms of guidance for the 2017 full year, the company expects to see revenues in the range of $8.90 billion to $9.10 billion with an adjusted EBITDA between $3.55 billion and $3.70 billion. The consensus estimates are $4.76 in EPS and $8.97 billion in revenue for the full year.
ALSO READ: RBC Says These Top Health Care Stocks Could Be 2017 Takeover Candidates
Jefferies looked at the data and maintained its Buy rating but cut its price target by roughly 18%. The firm lowered its price target to $18 from $22, and it wasn’t the only one being cautious.
A few other firms followed suit:
BTIG reiterated a Neutral rating.
BMO Capital Markets reiterated a Market Perform rating but lowered its price target to $19 from $21.
JPMorgan has a Hold rating with a $15 price target.
RBC lowered it price target to $21.
Apart from these, Jefferies detailed the reasoning in its report:
ALSO READ: Large Cap Biotech Stocks to Buy May Be the Cheapest in Years
Mgt’s rev outlook ($8.9-9.1B) bracketed consensus. However, adj EBITDA is expected to be in the range of $3.55-3.70B (vs $3.88B consensus) as Valeant plans to further invest in its R&D pipeline and step up promotion to drive longer term value for its key GI franchises (40% increase in reps). As such, adj EBITDA margin should dip to 40.3% (midpoint of guidance) vs 45.7% in FY16. Mgt appears to be of the view that the loss of exclusivities (LOEs) on drugs such as Solodyn and Acanya can be offset by new launches (Siliq, Vyzulta, etc.) with the implication that FY17 could be a “trough” year prior to the potential re-emergence of growth in FY18 and beyond. We cut our FY17 & FY18 rev & EPS estimates to $8.92B & $3.88 and $8.88B & $4.17 (vs $9.08B & $4.95 and $9.12B & $5.37).
ALSO READ: Fiat Continues Disappearing Act as Sales Plunge
Shares of Valeant closed Friday down 5% at $13.06, with a consensus analyst price target of $21.34 and a 52-week trading range of $12.90 to $70.43.
I'm in it to win it!
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Here is the best word that describes what i do here.
Intuitive;
means having the ability to understand or know something without any direct evidence or reasoning process.
I was born with it, I'm truly blessed!
Alway's searching for winners'
NASDAQ DIP and RIP
Here is the best word that describes what i do here.
Intuitive;
means having the ability to understand or know something without any direct evidence or reasoning process.
I was born with it, I'm truly blessed!
Alway's searching for winners'
