National Bank has fair value at $155 US, $155 CDN, for VRX We are lowering our fair value estimate for Valeant to $115 per share from $160 after cutting our revenue and profit projections following management's weaker-than-expected outlook for 2016. Additionally, due to greater uncertainty over the company’s ability to stabilize drug volume and pricing during negotiations with payers, and its new distribution partnership with Walgreens, along with increased concern about the company tripping debt covenants, in particular financial reporting covenants from the delayed 10-K filing, we’re shifting our uncertainty rating to very high. Our valuation implies an approximate 12.5 times multiple on our new estimate for the firm's 2016 EPS and assumes Valeant can eventually stabilize its operations and can meet debt obligations without raising equity capital or major asset sales. We’re leaving our narrow economic moat rating in place for now, but we acknowledge the company has significant challenges ahead to meet our expectations and alleviate default concerns.
As long as the company can stabilize performance and address near-term volatility from the discontinued Philior relationship, we currently envision Valeant can produce sufficient cash to pay its $1.6 billion cash interest payments in 2016 with some leftover to help pay management’s target debt reduction of nearly $1.7 billion. At the end of the year, Valeant’s senior secured leverage ratio of 2.1 came in under the 2.5 debt covenant, and EBITDA interest coverage of 3.3 similarly surpassed the 3 times covenant requirement.