News Press Releases

There's No Fundamental Reason For Valeant Shares To Be Down

August 29, 2017

With Valeant Pharmaceuticals Intl Inc (NYSE: VRX) shares taking a hit Tuesday, Cantor Fitzgerald quickly moved in with an intraday alert to allay fears concerning the company.

As such, the firm reiterated its Overweight rating and $23 price target.

the time of writing, shares of Valeant were sliding 6.78 percent to $13.27.

Analysts Louise Chen and Brandon Folkes attributed the weakness in part to recent headlines that highlighted a significant civil securities fraud lawsuit against Valeant. The analysts noted that the lawsuit was filed in federal court New Jersey, seeking $80 billion in damages.

Cantor Fitzgerald thinks the company would vigorously defend the suit, going by its past statements to similar suits. The firm also said some of the weakness was due to sell-side price target revisions.

The firm believes a greater appreciation for the company's solid execution and future growth prospects under the new management team should lead to upward revisions to earnings estimates for outyears from 2019 onward. This, according to the firm should result in multiple expansion, sending shares higher.

"While the suit definitely creates headline risk, we expect any resolution to be significantly less dramatic and impactful than the initial claims in the suit," the firm added.

August has been an turbulent month for the company. Valeant received a complete response letter, or CRL from the FDA on Aug. 7, regarding its NDA for latanoprostene bunod, an intraocular-pressure lowering single-agent eye drop meant to treat open angle glaucoma or ocular hypertension.

The company's second-quarter earnings released on Aug. 9 also did not go down well with investors.

In the month-to-date period, the stock has lost about 14 percent, not counting Tuesday's sell-off. Cantor's encouraging note has come at the right for Valeant. But will it help to arrest the slide and infuse positivity into the stock?