Valeant (VRX) Answered Its Questions Well, But Other Questions Remain - Deutsche Bank

Deutsche Bank maintained a Hold rating on Valeant Pharmaceuticals (NYSE: VRX) with a price target of $204. Commented following the company's conference call earlier today discussing its relationship with specialty pharmacy partner Philidor. Analyst Gregg Gilbert said he was disappointed that the call was ended by management before Deutsche Bank and others were able to ask questions.

"While we believe management did a pretty good job discussing the items it decided to discuss (based at least in part by questions that had been asked by investors in recent weeks), we were disappointed that the call was ended by management before we (and potentially other questioners) were able to ask questions," said Gilbert.

"CEO Mike Pearson re-affirmed Q4 and 2016 guidance but this guidance now excludes “one-time expenses associated with recent events” – the magnitude of these expenses is hard to estimate, and it is not clear to us whether the expenses will be one-time in nature. He also indicated that the company is not “anticipating any impact, but it is hard to predict how recent events will impact the business…” As for the newly-formed ad hoc committee of independent directors that the company announced will review “other issues that have been raised publicly” with respect to Philidor, management did not provide specifics on all of the items that the committee will assess and no time line was offered. VRX will also develop contingency plans if the company decides to sever ties with Philidor and move to third-party specialty pharmacies," continued the analyst.

Gilbert added, "While the stock could see significant upside over time if the market shifts its focus away from controversy and fear, it is difficult to predict when this will occur. In the meantime, we assume investors will be very focused on assessing the degree to which the company can grow its business organically from here."

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 $116.16 yesterday.

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