Valeant Pharmaceuticals Intl Inc. (NASDAQ: VRX)
Valeant Pharmaceuticals has had a tough run in the market for more than a year now, and for good reason. The Philidor Scandal continues to haunt the company to this day. However, is there a bottom? Today, we’ll talk about the scandal, how the issue has progressed, what we’re seeing from the stock today, and what we can expect to see from VRX ahead.
The Philidor Scandal That’s Haunting VRX
If you’re new to Valeant Pharmaceuticals, you may not know about the Philidor Scandal. However, it is the single most important thing that investors need to understand before getting involved in the stock. Here’s what happened…
Last year, Citron Research released a research note claiming that VRX was using its relationship with a pharmacy known as Philidor to pad the numbers and mislead investors. In the report, Citron even went as far as saying that the company is the Enron of the pharmaceutical industry.
Unfortunately, as the story progressed, while no one wanted to believe that the claims were true, the proof was in the pudding. VRX was indeed misleading investors in what many believed to be a criminal way.
How The Issue Has Progressed
Shortly after the claims were made and the investigations into the claims started, we started to see big changes in Valeant Pharmaceuticals. Under the guidance of Activist investors, home grown investors, and other counsel, the CEO of the company resigned and a new CEO came on board quickly.
From there, things started to look up. That is, until the legal issues piled up on the company. Unfortunately, due to the massive losses associated with this scandal, legal battles were soon waged, battles that VRX is still in the midst of.
More recently, we learned that more legal issues were coming as a result of the scandal. In fact, the acting CEO and CFO at the time of the scandal are now under criminal investigations for their parts. Unfortunately for VRX, things just keep going from bad to worse.
What We’re Seeing From The Stock
Unfortunately, things haven’t been good for Valeant Pharmaceuticals in the wake of the scandal. The declines we’ve consistently seen on the stock are continuing today. Currently (2:16), the stock is trading at $19.63 per share after a loss of $1.49 per share or 7.05% thus far today. It’s nearly unthinkable that under a year ago, this stock was trading at nearly $100 more.
Is There A Bottom
For a while I have been a proponent of the bullish argument on Valeant. However, as the situation progresses, things are changing for the worst rapidly. At the end of the day, the company does have time to deal with the legal blues, but as sales continue to miss the mark and more issues come down the line, it’s becoming doubtful that the company will be able to make it over the hurdle. While I’m hoping for the best for VRX and its investors, if you’re considering investing at this point, I urge you to move with caution.
What Do You Think?
Where do you think VRX is headed moving forward? Join the discussion in the comments below!