Valeant Pharmaceuticals Intl Inc (NYSE: VRX)
Valeant Pharmaceuticals is having a strong day in the market today, signaling that investors are expecting to see an overwhelmingly positive report. This is a much needed sign of good news from VRX as the stock has been plummeting for months now. Today, we’ll talk about why Valeant Pharmaceuticals has had such a rough time in the market, what I’m expecting to see from earnings, and what we can expect to see from the stock moving forward.
Why VRX Has Been Struggling
As mentioned above, Valeant Pharmaceuticals has seen better days in the market. In fact, just months ago, the company was one of the top biotech stocks on the market, trading around $100 per share. However, today, it trades below $30 per share, and for good reason. Late last year, Citron decided to look into VRX. The company had been the center of a discussion with regard to drug pricing practices and seemed like it could be a win. However, Citron found some bad news, and wasn’t shy about publishing it.
Citron found that VRX did most of its sales with a pharmacy known as Philidor. However, it had also been using its relationship with Philidor to pad the numbers, giving investors unrealistic expectations. In fact, the report Citron published was so bad that the company compared Valeant Pharmaceuticals to Enron, calling it the Enron of the pharmaceutical industry. As time passed, investigations into the matter proved that Citron was telling the truth.
As a result of the scandal with Philidor, the CEO of VRX made the decision to step down. There have also been a couple of big changes to the company’s Board of Directors as well as a new contract with Walgreens. So, while the scandal was incredibly bad news overall, the company has been working hard to pick up the pieces and move forward.
What I’m Expecting To See From The Earnings Report
Valeant Pharmaceuticals is scheduled to report its earnings for the most recent quarter tomorrow, and this is going to be a big report. Because of the Philidor scandal and the $50 million deficit found through the scandal, many analysts have revised their predictions with regard to VRX earnings downward in a big way for this report. However, even after the Walgreens agreement was signed, none of the earnings expectations have seen upward revisions. With that said, when we account for the sales that Walgreens is driving for VRX at the moment, I’m expecting to see both revenue and earnings top analyst expectations.
What We Can Expect From Valeant Pharmaceuticals Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from VRX. The reality is that they have fallen on hard times, and that was their own doing. However, since the scandal was uncovered, we’ve seen increasingly positive news out of the company. Not only has there been a new, and highly respected CEO appointed to replace the previous, we’ve seen highly respected professionals added to the company’s Board of Directors as well as a huge agreement with Walgreens. I guess what I’m trying to get at here is that when some companies go through these kinds of hardships, they simply shrivel up and head for bankruptcy, but that’s not what we’re seeing from VRX. At Valeant Pharmaceuticals, they have pinpointed the problem, addressed it, and moved past it. Now, they are getting back to business as usual and following a clear plan for growth. All in all, things are looking great for the stock moving forward.
What Do You Think?
Where do you think VRX is headed moving forward and why? Let us know your opinion in the comments below!