Valeant (VRX) Q3 a Mixed Bag, Guidance Cut on Higher Side of Expectations - BMO

November 8, 2016 8:22 AM EST
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Price: $15.01 -3.97%

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    11 Buy, 11 Hold, 4 Sell

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BMO Capital analyst Gary Nachman weighed in on Valeant Pharmaceuticals (NYSE: VRX) following mixed Q3 results and 2016 guidance reset.

Nachman commented, "VRX reported 3Q revenue of $2,480mn vs. our/consensus of $2,463/2,511mn. Adj. EPS was $1.55 vs. our/consensus of $1.65/1.75. The quarter was mixed, with a lot of moving parts. As expected, 2016 guidance was cut meaningfully as management is taking a more cautious view on the trajectory in the back half of the year. We maintain our Market Perform rating as it will take time to see how VRX executes even with the bar lowered."

The analyst said while investors have been anticipating a guidance cut, they think the magnitude is on the higher side of what most expected. 2016 revenue was lowered by $350-450mn (to $9.55-9.65bn from $9.9-10.1bn), adj. EBITDA was reduced by $550-600mn (to $4.25-4.35bn from $4.8-4.95bn) and adj. EPS came down significantly by $1.30-1.50 (to $5.30-5.50 from $6.60-7.00.

"We believe it was important for management to set a more realistic bar given all of the pressures in its business," he said.

The firm maintained an Market Perform rating and price target of $29.

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 $19.13 yesterday.



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