Mizuho Wants "to Get More Constructive" on Valeant Pharma (VRX)

Mizuho Securities analyst, Irena Koffler, reiterated her Underperform rating on Valeant Pharmaceuticals (NYSE: VRX) but stated that she "wants to get more constructive". Are we getting to the end of the Valeant pain? Apparently not yet.

The analyst is modeling revenues of $2.51B and $1.54 EPS vs. guidance of ~$1.45 (based on the 1Q:16 slide 13 discussion, mid-point EPS of $6.80, and 40% of earnings occurring in 1H:16). Consensus estimates are $2.49B and $1.57, which sets VRX up for a slight miss. 2Q:16 guidance implies opex levels comparable to 1Q:16, which suggests spending in excess of the guided $3.0B 2016 range (based on $400M in R&D plus 26% on SG&A, off a midpoint of $10B in revs). If correct, this would force the analyst to decline opex in 2H:16, which she views as unrealistic for a company planning to launch three new products while supporting existing verticals. Prior revenue guidance assumed upside from seasonality and improved economics within the Walgreens agreement but these may not materialize. The analyst expects VRX to lower guidance again, and therefore models 2016 EPS of $6.11 relative to guidance of $6.60-$7.00 and consensus of $6.63.

No change to Underperform rating and $11 PT.

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 $22.86 yesterday.

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