Wells Fargo Raises Valuation Range on Valeant Pharm (VRX), Synergy Opportunities Could be Limited

Wells Fargo is reiterating its Market Perform rating on shares of Valeant Pharmaceuticals (NYSE: VRX) following completion of the iNova Pharmaceuticals acquisition. The firm has increased its valuation range on the stock from $44-$46 to $45-$48.

Following completion of the acquisition, the firm has raised its FY12 EPS estimate from $3.52 to $3.78 as the company's exposure in Australia was boosted substantially. Wells Fargo currently estimates $3.18 billion in total sales for the fiscal year. iNova is expected to report about $200 million in revenue for 2011 and is forecasted to grow revenue by 10 percent each year for the next four years.

An analyst at Wells Fargo comments, "We currently estimate 2011 revenue of only $339MM for VRX’s Canada/Australia business with a greater portion of this coming from outside Australia. The addition of iNova should instantly boost VRX’s OTC presence in Australia; however, since this is a “geographic footprint reinforcement” play, we believe opportunities for significant cost synergies could be modest."

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 $45.33 yesterday.

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