Aegis Capital affirms Valeant Pharmaceuticals (NYSE: VRX) at Buy with a price target of $180 following Q1 results. Valeant reported Q1 EPS of $1.76,versus consensus views calling for EPS of $1.72. Revenue for the quarter came in at $1.85 billion, versus $1.04 billion reported last year.

Analyst Ram Selvaraju commented, We have slightly modified our cash flow to EPS projection from $8.84 to $8.88. Valeant continues to take an aggressive stance with respect to Allergan, Inc., and management indicated on its earnings call that it remains confident that Allergan would eventually have to capitulate. However, we also note that Valeant management have clearly indicated their intent to stay active on the business development front, regardless of what happens with the Allergan transaction.

On cost-cuts to Allergan's R&D, Selvaraju said, We note that Valeant appears to have made a compelling case for its proposal to dramatically scale back Allergan's R&D activities. Allergan's massive R&D budget exceeded $1bn in 2013 alone. Valeant management has indicated that, given Allergan's 35 product candidate failures in clinical development (a rate that is even worse than that of the industry), along with the fact that roughly 80% of Allergan's current R&D projects are outsourced, cut-backs in R&D spending should create shareholder value.

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Shares of Valeant Pharmaceuticals closed at $133.35 yesterday.