Valeant Stock: Why Traders Are Going Nuts Over VRX Stock

vrx stockWhat Does VRX Stock’s Rally Mean? 

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) made an impressive recovery today as VRX stock rose 30% despite the ongoing investigation into two of the company’s former executives.

Yesterday, VRX stock looked all but dead after falling 12.02% as a result of a fraud investigation undertaken by U.S. prosecutors. This is coming on the heels of an already abysmal couple of years for Valeant as the stock has dropped to less than a tenth of its peak value of $335.32.

For today, at least, VRX stock has something to celebrate with its resurgence. While still nowhere near the powerhouse Wall-Street-darling company it once was, Valeant can at least count today’s climb as a victory.

This stock will be one to watch in the coming months. Sources told Bloomberg that charges could be levied within a couple of weeks. The results of this investigation and the trial of the executives will definitely draw investor scrutiny of VRX stock, for ill or good. (Source: “Valeant stock plunges on report of criminal probe of former top executives,” Financial Post, October 31, 2016.)

There are also several other investigations into Valeant, and any news dropping in relation to the other cases could shake Valeant’s value even more.

Pharmaceutical companies have garnered a lot of negative headlines recently for the price hiking of medication, thanks to the antics of executives like Martin Shkreli and his company, Turing Pharmaceuticals LLC, which infamously raised the price of its antiparasitic drug “Daraprim” by over 5,000%. (Source: “Lunch with the FT: Can Martin Shkreli defend corporate greed?,” Financial Times, October 27, 2016.) 

Former presidential-hopeful Senator Bernie Sanders tweeted about one such company two weeks ago, complaining that Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) had spiked the price of cancer medication to an unaffordable level. The tweet by Sanders s said to have cost the company a 15% fall in its stock price. ARIA stock has only continued on a downward spiral, losing almost a third of its value since the tweet. (Source: “Bernie Sanders tweet sends shares of Ariad Pharmaceuticals down 15%,” CNBC, October 15, 2016.)

The fraud charges and allegations of price manipulation levied at VRX stock are certainly bad publicity and, as seen above, this can drastically impact these pharmaceutical companies. However, today’s jump provides evidence to the contrary. We’ll be keeping a close eye on VRX stock in the days to come. Could this be a blip in the radar or a sign of a resurrection for the embattled company?

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