By Jacob Wolinsky. Originally published at ValueWalk.
Valeant Pharmaceuticals halted trading in pre-market hours for news which we are awaiting and will update when it comes in.
Also, UBS has dropped coverage, they have thrown in the towel stating:
Suspending converge due to lack of visibility in financials We are suspending coverage for VRX given the lack of transparency in the company’s financials and uncertainty over the timeline of that visibility. We believe that under the current circumstances, it is not practical to forecast the company’s financial results and maintain an investment opinion. Therefore, we are suspending coverage of Valeant. Valuation: Suspending coverage Our previous rating and forecasts for VRX can no longer be relied upon. Our prior PT of $213 was based on a P/E multiple of ~16x our prior 2016E EPS estimate of $13.50.
Valeant Pharmaceuticals
Stay tuned for what could be another wild day for the company
Additionally, there have been two downgrades of the company this morning.
Mizuho:
We are downgrading VRX to Underperform from Neutral, and lowering our PT to $18 from $70. After careful consideration of comments from the earnings call, we view 3-year growth forecasts as unreliable and see the business as contracting. We also expect erosion of the company’s topline to exceed the exclusivity risk guided by Valeant due to heavier rebating and divestitures required for debt repayment.
Barclays
We are downgrading shares of VRX to EW and lowering price target to $34; our downgrade reflects the greater uncertainties facing VRX over the next 12-18 months. Despite recent challenges facing VRX, we felt it had solutions to address them, namely the relationship with Walgreens to replace its troubled/controversial relationship with Philidor. There were unknowns around profitability of scripts through Walgreens and even though initial volume trends were encouraging, the magnitude of the cut to VRX’s outlook for 2016 came as a surprise.
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