Valeant Pharma (VRX): This Isn't Just Headline Risk - Mizuho

August 11, 2016 8:08 AM EDT
Get Alerts VRX Hot Sheet
Price: $15.00 -0.73%

Rating Summary:
    10 Buy, 12 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 22 | Down: 34 | New: 34
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Mizuho Securities analyst, Irina Koffler, reiterated her Underperform rating on shares of Valeant Pharmaceuticals (NYSE: VRX) and highlighted the importance of last night's WSJ report that VRX is under criminal investigation by the U.S. attorney's office. The charges are for mail and wire fraud and obscuring the company's real relationship with Philidor from insurers.

The company responded that this investigation has been previously disclosed in its SEC filings (and that it is fully cooperating) but the analyst points out that this degree of detail was not previously provided. This investigation may be a follow-on to a similar but separate NJ RICO case that seeks treble damages on "hundreds of millions in sales" during the period from Jan 2013-Nov 2015, with over $500M in sales alleged in 2015 alone.

The analyst has been struggling with what to do with this stock as we are still not comfortable with the sequential decline in U.S. sales, which is unique amongst other companies in our space, the reiterated 2016 guidance which seems challenging, and the company's ability to meet its existing interest coverage ratio covenants (which it is in the midst of hurriedly amending).

No change to the price target of $11.00.

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 $27.32 yesterday.

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