This Could Be a Catalyst for VRX Stock
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) endured a barrage of default notices from its creditors earlier this year, when it delayed filing with the Securities and Exchange Commission (SEC). But for investors, it might be more interesting to know that Valeant stock, while down by some 72% since the start of 2016, is still vibrant and cheap.
Valeant said that it expects to post a first-quarter profit of $1.30 to $1.55 per share next July. This should push Valeant stock well beyond the current range between $25.00 and $35.00 per share. Valeant Pharmaceuticals stock could even move up by simply fulfilling its promise to file its delayed results ahead of the July 31 deadline established by its lenders. (Source: “Valeant Pharmaceuticals says it will file Q1 results before deadline,” CBC News, May 9, 2016.)
Indeed, if Valeant can deliver the results by June 10, as it has recently claimed, with the U.S. SEC and Canadian securities regulators, Valeant stock could benefit those who can grab some at the current price. (Source: Ibid.)
It was only at the end of April that Valeant was able to file its 2015 full-year results, as it was dealing with a number of U.S. government investigations. Therefore, there was little more optimism for Valeant to announce that it will file the first quarter, with positive earnings per share (EPS) to boot, ahead of schedule. Therefore, perhaps, Valeant stock might be worth more effort watching, rather than just sitting on the sidelines.
Valeant stock has come under pressure lately as the U.S. Senate has made public over 800 pages of reports related to Valeant and an investigation into its practices. The information includes e-mail exchanges between Valeant executives, including former CEO Mike Pearson and hedge fund manager Bill Ackman, who has taken an active role in Valeant’s board since last March. (Source: “The company is at risk of getting into a death spiral’: Bill Ackman’s emails reveal a wild relationship with Valeant,” Business Insider, May 9, 2016.)
Famed investor Warren Buffett also scared Valeant bulls last week. Buffett criticized Valeant, describing it as “enormously flawed.” (Source: “Valeant Pharmaceuticals International Inc.’s business model ‘enormously flawed,” The Financial Post, May 3, 2016.) That was the best thing he said about the company. The comments came as Congress interviewed Ackman and Pearson about the company’s dealings. All this has kept Valeant stock from gaining ground. But, Valeant stock has a good chance of rewarding patient—and just a bit risk-prone—investors if it delivers on the timing of its Q1 filing.
So far, thanks perhaps to Bill Ackman’s energy, Valeant fulfilled its promises. Bill Ackman promised that Valeant would have a new CEO within weeks rather than months, as many investors expected. As promised, Valeant does have a new CEO: Joseph Papa. He brings pharma sector experience and he’s not “in it for the money.” (Source: “Valeant’s new CEO: I’m not in it for the money,” CNBC, May 9, 2016.)
Speaking of optimism, BMO has set a $66.00 target for Valeant stock, while RBC Capital suggests $65.00. Both are more than double Valeant stock’s current price. (Source: “RBC Capital Reaffirms “Sector Perform” Rating for Valeant Pharmaceuticals Intl Inc (VRX),” Newsway 21, May 9, 2016.)
The bears may have to change course on Valeant, as VRX stock has more bullish points in its favor than negative ones.