Valeant (VRX) PT Cut to $33 at RBC Capital

RBC Capital analyst Douglas Miehm lowered estimate and his price target on Sector Perform-rated Valeant Pharmaceuticals (NYSE: VRX) to $33.00 (from $58.00) following mixed earnings, which were overshadowed by sharply lower guidance.

Miehm commented, "Total revenue guidance was lowered to $9.9-10.1B, from $11.0-11.2B and cash EPS guidance decreased to $6.60-7.00 from $8.50-9.50. Management is now guiding to $4.80-4.95B in Adj. EBITDA, down from $5.6-5.8B. We had anticipated revenue guidance would be in the $10.2-10.6B range and Adj. EBITDA in the $5.2-5.5B range, with increasing SG&A and R&D spend impacting EBITDA more than the top line. We expect the street to view the significant guidance reduction negatively, particularly given the proximity of the Adj. EBITDA guidance to the new term debt covenants which require 2.75x annual interest coverage (Adj. EBITDA ~$4.7B). Subsequently, we believe that the equity came under pressure today as the guidance was likely too close for comfort for many investors. Management noted several times on the conference call that it expects to meet all covenants with its current guidance, suggesting it is conservative."

For an analyst ratings summary and ratings history on Valeant Pharmaceuticals click here. For more ratings news on Valeant Pharmaceuticals click here.

Shares of Valeant Pharmaceuticals closed at $24.64 yesterday.

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