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Wall Street analysts gave scathing reviews to the management of Valeant Pharmaceuticals International ( VRX ) Wednesday, a day after a disastrous Q4 report and guidance cut the stock price in half. “We admit upfront, we have been humbled by our stock call on Valeant, which we have defended despite the continuing spate of bad news, as we believed that despite the noise surrounding the company, much of the fundamental businesses had been performing well,” wrote Nomura analyst Shibani Malhotra as she downgraded the stock to neutral from buy. “Despite the fact that our new PT (price target) for $60 represents 79.1% potential upside, we do not expect Valeant shares to outperform the market near term, as we have lost confidence in management’s ability to understand its own business and to provide reliable guidance.” Other analysts echoed the loss of confidence, including Canaccord Genuity’s Corey Davis, who cut the price target to 40 from 75 while maintaining a hold rating. “The weak guidance was likely the last straw for many investors, underscoring the numerous risks that we had highlighted in our recent downgrade,” Davis wrote in his research note. “Further, the threat of default on Valeant’s debt raises additional questions about what is behind the delayed 10-K filing.” Davis added that Valeant was unlikely to risk a credit default by missing its 10-K filing deadline if only a minor restatement of financials is in the works, raising the possibility that yet more bad news is coming. But Rodman & Renshaw analyst Raghuram Selvaraju wrote that a default seems unlikely. “We anticipate that the firm should be in a position to file its 10-K by April of this year and that its creditors would not invoke the cross-default clauses in Valeant’s debt agreements,” Selvaraju wrote in a research note. Selvaraju was one of the few left maintaining a buy rating on the stock, but he lowered his price target to 118 from 150. Jefferies analyst David Steinberg cut his price target in half, to 53, while TD Securities analyst Lennox Gibbs hacked his target to 45 from 110. Nonetheless, Valeant stock was rebounding in the stock market today , up 2.5%, above 34, in midday trading. So was Endo International ( ENDP ), whose stock tumbled 23% Tuesday likely because it’s headed by former Valeant executive Rajiv De Silva; it was up 8%, near 35, midday Wednesday. Specialty drug maker Mallinckrodt ( MNK ) continued to sink as Citron Research short seller Andrew Left, whose research helped blow open the Valeant scandal last year, continued the attacks on Mallinckrodt that he started in November, saying the company “ makes Valeant look like a bunch of choirboys .” Mallinckrodt stock was down 11% Wednesday after sliding 14.5% Tuesday. Scalper1 News
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