Valeant's (VRX) SEC Correspondence Shows Potential Problems With Tax Accounting, Adjusted Earnings Metrics - Wells Fargo
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Wells Fargo reiterated an Underperform rating on Valeant Pharmaceuticals (NYSE: VRX) with a price target of $10-$13. Analyst David Maris said new SEC correspondence reveals potential problems with Valeant’s tax accounting and use of adjusted earnings metrics. The correspondence between the SEC and Valeant can be found here and here.
Maris explained, "In a series of letters made available by the SEC today, it appears the SEC has been questioning Valeant in regards to its tax reporting and disclosures, among other items. Recall that in our initiation of coverage report published in February 2016 we wrote extensively about potential problems arising from Valeant’s tax reporting, as well as its use of valuation allowances. It also appears from the correspondence that in response to concerns highlighted by the SEC, Valeant is re-assessing its current non-GAAP reporting and disclosures and is likely to present new measures and disclosures with its 2017 guidance and 4Q16 results, including a potential new adjusted net income measure."
Shares of Valeant Pharmaceuticals closed at $17.16 yesterday.
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