Valeant Pharmaceuticals Intl Inc (NYSE: VRX)
Valeant Pharmaceuticals is possibly the most heavily debated stock in the biotechnology sector at the moment, and for good reason. The company was caught red-handed misleading investors. So, there’s plenty of fuel for the bearish fire. On the other hand, the bears argue that the company has made several changes to position it for growth since. Today, we’ll talk about the scandal that is fueling the bearish fire, changes that we’ve seen from the company since, and what I’m expecting to see from VRX moving forward.
VRX Messed Up Big Time
There’s no denying the fact that Valeant Pharmaceuticals really dropped the ball. The truth is that for some time, the company had been using its relationship with its biggest customer to pad the numbers and make it look as though they were performing better than they actually were.
While this could have went to the point where it led the company to doom, there was a silver lining. Late last year, there were several investigations led by different analyst firms and even the United States government into pricing practices at VRX. While pricing practices proved to be on point, one investigation turned up something else.
An analyst firm by the name of Citron found discrepancies in the company’s books. Those discrepancies pointed to a big issue. VRX had been working with Philidor to pad the numbers and make sales look more positive than they actually were. While I didn’t want to believe it in the beginning, proof continued to pour out, and it became impossible to deny the allegations. As a result of the scandal, the bears took hold on the stock, driving the value of Valeant Pharmaceuticals down exponentially.
The Bulls Are Watching Change
While the bears argue that the company misled investors, and therefore is doomed, the bulls see things differently. In fact, the bulls see that VRX has made several big changes that will lead to future growth in the stock. All in all, there are 3 big changes that the bulls are confident will lead to growth.
The first change is the fact that VRX made the decision to cut ties with Philidor. While this meant that it would be giving up a massive amount of sales, it was incredibly important for the company to do this in order to regain investor trust.
The second big change the company made was an announcement that it had signed a contract with Walgreens, one of the world’s largest pharmacies. Under the new agreement, Walgreens would start to sell Valeant Pharmaceuticals branded products, helping to pick up sales lost due to the Philidor cancellation.
Finally, the third big change was changes made to management. Not only did the company replace the CEO with a highly respected member of the biotechnology community, it also made key changes to its board. With Joseph Papa as the CEO and activist investors like Bill Ackman on the Board of Directors, bulls see gains in the future!
What I Think We’ll See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from VRX. At the end of the day, the company made a big mistake. However, what we’ve seen since the mistake was made has been overwhelmingly promising. At this point, we’re talking about a stock that has fallen well over 70%. Support is here! Now, with the big changes made, VRX has positioned itself incredibly well for future growth.
What Do You Think?
Where do you think Valeant Pharmaceuticals stock is headed moving forward? Let us know your opinion in the comments below.