Valeant (VRX) 3Q Earnings Preview: Underlying RX Trends Remain Weak - Wells Fargo
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Wells Fargo analyst David Maris issued a Q3 preview of Valeant Pharmaceuticals (NYSE: VRX), saying while the company should have some tailwinds for 3Q including price increases, cost cuts, and a now fixed Walgreens deal; however, Valeant's underlying U.S. prescription trends remain weak. He said the company's reliance on price could remain an overhang.
They believe key questions this quarter will be about litigation/investigations, debt refinancing, Xifaxan patent durability, and an update on the B&L Florida manufacturing site that recently received an FDA warning letter.
The firm has lowered estimates for Valeant’s GI franchise and as a result lowered 2017 EPS estimate from $7.72 to $7.56.
On reports Monday of potential accounting fraud, Maris said if true could result in significant financial penalties and potentially
higher borrowing costs. They currently have $2 billion in their DCF to cover potential settlements from class action suits and IRS, DOJ and other investigations.
The firm maintained an Underperform rating and $17-$22 valuation range.
Shares of Valeant Pharmaceuticals closed at $17.84 yesterday.
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