Valeant Stock Set to Continue Recovery
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is slowly but surely moving higher. Indeed, if we are to give credence to its CEO Joseph Papa, Valeant stock is poised for a nice recovery by the start of 2017. The bullish argument draws from the fact that Valeant confirmed a prediction made last August 9. Namely, that the company would meet a revenue target of $9.9 billion to $10.1 billion. (Source: “Valeant’s new CFO to review 2016 numbers, CEO says, despite ’16 forecast being reaffirmed in August,” Financial Post, September 14, 2016.)
Indeed, some analysts see Valeant growing 25% to 30% a year for the next five years. (Source: “Guggenheim Analyst Chen Takes Bullish Outlook On Valeant’s (VRX) Growth Potential,” TheStreet, September 14, 2016.) If that growth doesn’t convince you, consider the gains that Valeant stock can achieve if the company manages to offload assets by the end of 2016. This would help repay part of its debt burden, as Papa noted. (Source: Ibid.)
Papa said that Valeant has already signed up investment bankers for services to help sell assets. Having experienced a full year of market turmoil, Valeant will reorganize its operations into three segments. The sell-off will concern about $8.0 billion of assets, including core assets. This means that even some of the heavy-hitting brands like Bausch & Lomb Incorporated and Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), as well as some of its dermatology or gastroenterology brands, would be up for sale. (Source: “Valeant CEO says he’ll never say never to selling core assets like Bausch & Lomb,” CNBC, September 7, 2016.)
The logic is simple. As Papa told CNBC, Valeant has about $30.0 billion in debt. Therefore it will do whatever is necessary to ensure that the company gets back to profitability. According to Papa, his strategy aims to cut Valeant’s $30.0-billion debt over the next 18 months. Despite the fears of some analysts, Valeant continues to maintain its forecast for the current year.
Roundly criticized for sometimes carrying out marked increases in the prices of certain drugs in recent years, Valeant expects further price increases this year and in 2017. The increases will, however, be much more moderate, said Papa. (Source: Ibid).