Valeant (VRX) 3Q Earnings Preview: Underlying RX Trends Remain Weak - Wells Fargo

November 1, 2016 7:54 AM EDT
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Price: $14.73 -1.14%

Rating Summary:
    10 Buy, 12 Hold, 4 Sell

Rating Trend: Down Down

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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.

For an analyst ratings summary and ratings history on Valeant Pharmaceuticals click here. For more ratings news on Valeant Pharmaceuticals click here.

Shares of Valeant Pharmaceuticals closed at $17.84 yesterday.

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