Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) is cheap, according to analysts at Guggenheim. They estimate a possible 148% upside with a limited 6% downside risk to the company’s shares. They say the continuing uncertainty surrounding Valeant and Allergan, Inc. (NYSE:AGN) continue to be an overhang , as is the drug maker’s potential for organic growth. However, they say that historically, Valeant’s organic growth has been “robust” in the mid-single digits.

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Valeant’s growth to bounce back

In a report dated Aug. 13, 2014, analysts Louise Chen, Swati Kumar and Brandon Folkes call the drug maker “the most compelling investment opportunity” in all of their coverage universe. They expect Valeant Pharmaceuticals’ growth to bounce back again in the second half of this year after remaining flat in 2013. They say generic competition for the company’s top drugs weighed on its sales. The Guggenheim team adds that another weight has been the noise surrounding the Allergan and Galderma deals.

The analysts believe that in the second half of this year, new product launches from Valeant’s Luzu, Jublia and Bausch brands will drive the acceleration in sales growth. They say another key driver will be incorporating Bausch’s growth into its organic growth starting in the next quarter. A third driver, in their view, is easier comparisons for dermatological products.

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Why Valeant Pharmaceuticals may be cheap

The analysts point to four things Valeant management said on their second quarter earnings call that cause them to think that the company’s stock is cheap, even if it remains as a standalone company. First, they say debt repayment suggests a 47% upside potential. Second, they see an acquisition as bringing a 74% upside potential. The third and fourth suggestions both deal with if Valeant wins Allergan. In one of those scenarios, they see a 122% upside potential, and in the other, they see a 148% upside potential.

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Pershing Square addresses Valeant, Allergan

One of the biggest overhangs on both Valeant and Allergan has been Bill Ackman’s attempts to tie the two companies up in a merger. In his firm’s latest letter, the activist investor talked about their push to get them together. Specifically, he addressed a big issue that’s related to the topic: why some mergers that should happen don’t.

He said much of the blockage comes from management that might be out of a job after a proposed merger may oppose it due to what some call “social issues.” He said those issues could include the CEO’s desire to keep his job and the compensation that goes along with it. He added that CEOs often desire to ride out their job until they are ready for retirement, and he thinks that Allergan’s management is following this sort of behavior.