Valeant (VRX) New Hires Will Not Alleviate Long-Term Liquidity Concerns - Wells Fargo's Maris
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Wells Fargo analyst David Maris weighed in on Valeant Pharmaceuticals (NYSE: VRX) after the company announced series of
leadership and organizational changes and announced it has obtained the U.S. and Canadian rights to develop and commercialize NER1006, a low-volume polyethylene glycolbased bowel preparation for cleansing of the colon in preparation of colonoscopy.
Maris said the leadership and organizational changes "appears to be a movement in the direction of greater centralization." He also noted the newly announced General Counsel has a busy year ahead, including shareholder lawsuits, SEC investigation, IRS
investigation and an insider trading suit where discovery is already underway.
He believes investors may question some of the changes, like Valeant naming a new head of all markets other than the US and Canada who appears to have no experience in Europe and Latin America, two key geographies for Valeant. In addition, Valeant has named a new head of investor relations and business strategy who has no previous IR or strategy experience.
"Overall, we do not see the new personnel having any impact on the more than $30 billion debt or the key declining franchises and until those are addressed, we believe investors should have serious concerns about longer-term liquidity," he said.
On an unrelated note, they firm asked Valeant to confirm that one of its board members held/attended a private investor dinner at which Valeant was discussed. "Valeant could not confirm if the meeting took place or the content of the meeting," Maris said. "We believe it is inadvisable for board members of public companies to host investor meetings during quiet periods."
The firm maintained an Underperform rating and $17-$22 valuation range.
Shares of Valeant Pharmaceuticals closed at $21.96 yesterday.
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