Mizuho Cautious Into Valeant Pharmaceuticals (VRX) Q2 Print
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Mizuho Securities analyst Irina Koffler is cautious into Valeant Pharmaceuticals' (NYSE: VRX) Underperform Q2 earnings on August 8, saying it is unclear whether management will lower guidance and also whether even weak results may be unexpectedly well received. The firm reiterated an Underperform rating and price target of $8.
Koffler commented, "We model 2Q:17 revs of $2.29B and non-GAAP EPS of $0.94 vs. FactSet consensus of $2.23B and $0.94. Though we lowered 2017 revenue numbers, we view our sales estimates as relatively generous and do not rule out the possibility of a top-line miss vs. consensus. On the bottom line, we cut spending below guidance ranges and note that consensus estimates are at/below the low end of guidance ranges as well. During the quarter mgmt. issued information on revenue and EBITDA losses related to three divestitures (iNova, Dendreon, and Obagi), which implies that mgmt. is contemplating lowering guidance. However, the iNova and Obagi transactions haven't closed yet and we therefore worry that the company could hold the line until later in the year, which would be a negative to our Underperform thesis in the short-term. The stock has rallied on debt repayment news but not much has changed in the underlying business, so we think a correction is likely. On the other hand, a "not that bad" quarter could have an unexpectedly positive effect on the stock after the blow up in TEVA last week."
Shares of Valeant Pharmaceuticals closed at $15.13 yesterday.
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