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Mizuho Securities Downgrades Valeant Pharmaceuticals (VRX) to Underperform, $18 PT

March 21, 2016 6:16 AM EDT
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Price: $23.40 --0%

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    Up: 13 | Down: 11 | New: 11
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Mizuho Securities downgraded Valeant Pharmaceuticals (NYSE: VRX) from Neutral to Underperform with a price target of $18.00 (from $70.00).

"After careful consideration of comments from the earnings call, we view 3-year growth forecasts as unreliable and see the business as contracting," analyst Irina Koffler commented. "We also expect erosion of the company's topline to exceed the exclusivity risk guided by Valeant due to heavier rebating and divestitures required for debt repayment."

Koffler said they don't trust Valeant's 2016 or 3-year growth forecasts and our 2016 estimates are lower (i.e., they model $10.4B in revenue and $8.04 EPS relative to guidance of $11.0-11.2B and $8.50-9.50).

They also worry about liquidity and an ongoing insider trading class action suit that they believe could burden the liability side of the balance sheet.

The Underperform rating is predicated on an equally weighted combination of DCF analysis ($15) and a more conservative SOTP that employs lower sales multiples applied to updated 2015 numbers ($21) for a blended $18 PT.

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 $26.98 yesterday.



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