Citi Credit Research Sees Opportunity in Valeant (VRX), Initiates With Overweight Rating (MNK) (ENDP)

Citi Credit Research initiated coverage on Valeant Pharma (NYSE: VRX) with an Overweight rating. Analysts noted its global footprint, product diversification and strong FCF generation. Peers Mallinckrodt (NYSE: MNK) and Endo (NASDAQ: ENDP) were initiated at Marketweight.

In the report, analysts highlighted the difference between 'fear and fundamentals', and said they see opportunity for investors to go long pharma risk.

"In the backdrop of aggressive 'risk-off' sentiment coupled with headline risk around specialty pharma, the market remains in price discovery mode as dislocated technicals dominate market trading. Investors have demonstrated little patience as the barrage of negative press continues to hasten capital flight. However, we think it's important that investors not lose sight of the broader fundamental picture. Accordingly, we view the wide divergence in sentiment relative to fundamentals as an opportunity for investors to go long pharma risk," said Citi.

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