Valeant (VRX) Could Take a Large Write Down on Sprout - Wells Fargo's Maris

September 23, 2016 6:50 AM EDT
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Wells Fargo analyst David Maris sees Valeant Pharmaceuticals (NYSE: VRX) taking a large impairment charge on the carrying value of Sprout.

The charge could be as much 90% of its value, or more, Maris said, and without the addback to adjusted earnings going forward, this write-off would be a $0.14 per share headwind to annual adjusted EPS in 2017E and beyond.

"We believe there may be other assets that face this same problem, compounding Valeant’s divestiture plans, as Valeant would lose not only the cash flow from the products, but the addback to adjusted EPS of potentially overstated intangible asset amortization," he added.

The firm maintained their 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 $26.85 yesterday.



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