RE:RE:RE:Valeant will reach 100 $ again
There is no disputing their ability to meet debt obligations now according to year end financials and current guidance, the big uncertainty is how exisiting cash flow will be affected going forward. Assuming the acquisition model previously employed is no longer feasible due to price regulations, Valeant will have to become more like a traditional pharma company spending significantly more on R&D to grow. What will this number end up being and what bite will it take out of cash flow? Second, will all this negative press reduce sales in Valeant drugs? Third, how significant will price reductions be and will they be legally enforced or remain a pending government threat? How compressed will margins be and what at what magnitude will this effect existing cash flow. Papa has indicated that they will focus on the development of their drug pipeline, whats the costs, will they be forced to sell assets to do this, etc. I believe the new management and board will make this work and that the $30 billion debt holders will due everything in their power to not let this die. I am interested in out of the money puts right now as they pay quite well, however who knows how low uncertainty and the stock being out of favour will drive down the price. I expect shorts to be on the offensive before Q1 financials and revised guidance is released because the company is still extremely vulnerable.