The worst could be ending for shares of Valeant Pharmaceuticals (NYSE: VRX). After earning its first upgrade in months from Mizuho, who set a $15 price target (up from $10), VRX stock rallied 11% last week. Trading volume is still light but an earnings beat on May 8 could permanently end the downtrend in the eye car and GI specialist.
Teva Pharmaceuticals (NYSE: TEVA) and Mylan N.V. (NASDAQ: MYL), to a lesser degree, joined Valeant in bouncing back on the markets. Though Mylan’s generics business has more potential, thanks to its Epipen product, Valeant’s balance sheet management lowers its liquidity risks further. The firm applied its strong cash flow as a reason to redeem $150 million of debt due in 2020. That will cut Valeant’s debt to $25.4 billion.
Investors may speculate that Valeant’s Vyzulta sales improved last quarter. The drug, used to treat glaucoma, is getting positive coverage from Chinese media and on various YouTube videos. Those sources do not, on their own, validate higher sales. Management had issued a conservative outlook for 2018 in its last earnings report. Next quarter’s report may change. If sales did grow, CEO Joe Papa will mention it.
Takeaway
Growth in B+L and Salix, even in the low single digits, is a must for moving Valeant’s stock higher. If those units are on the mend, Valeant could get back to $20 sometime this year.
