The price of shares in Valeant Pharmaceuticals International Inc. has surged, reversing momentum after a Citigroup Inc. research note made favorable comments about the drug company and recommended buying its debt.
Valeant VRX, +15.70% shares closed trading on New York Stock Exchange on Thursday at $84.00, up 15.7%, on heavy volume of 25.3 million shares. The move contrasts with a rough past month for Valeant, in which its share price declined more than 50%.
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Thursday’s action enables Valeant to recoup at least a small part of the heavy losses the stock has seen since falling from an August high of $262.52 a share. The company has faced a string of questions about its drug pricing, disclosure and business strategy, especially concerning its now-ending relationship with a specialty pharmacy that distributed its drugs and helped drive Valeant’s revenue growth.
The Citigroup C, +0.15% note initiated coverage on Valeant’s debt with an “overweight” rating. While the bank said Valeant has faced challenges recently, “we think much of the bad news has been priced in,” and the debt is “a compelling buying opportunity.”
Citi said Valeant and other specialty pharmaceutical companies are “asset rich, high cash flow companies,” and “we think it is important that investors not lose sight of the broader fundamental picture.”
An extended version of this report appears at WSJ.com.