Valeant Pharmaceuticals Intl Inc – Time To Buy?

Valeant Pharmaceuticals Intl Inc (VRX) Health Care – Pharmaceuticals | Reports June 7, Before Market Opens

Valeant Pharmaceuticals Intl Inc – Key Takeaways

  • The Estimize consensus is calling for earnings per share of $1.46 on $2.36 billion in revenue, 4 cents higher than Wall Street on the bottom line and nearly $10 million on the top
  • Last month Valeant reiterated its Q1 guidance of $2.3-2.4 billion in revenue and earnings between $1.30-1.55
  • In its analyst call, Valeant must put to rest concerns over the $31 billion in long term debt and also deliver a viable growth strategy.
  • What are you expecting for VRX? Get your estimate in here!

Valeant Pharmaceuticals is prepared to announce its first quarter results tomorrow before the market opens. This earnings report marks the second since a scandal last fall put the company in the public eye. Since then, the stock has dropped over 90%, Michael Pearson was ousted as CEO, and Bill Ackman was placed on the board in an attempt to save the company. Tomorrow also marks the first report under new CEO Joseph Papa and will give investors an early indication of the company’s vision.

Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals Intl Inc

The Estimize consensus is calling for earnings per share of $1.46 on $2.36 billion in revenue, 4 cents higher than Wall Street on the bottom line and nearly $10 million on the top. Compared to a year earlier this represents a 24% decline in earnings while sales are expected to grow by 13%. Both earnings and revenue estimates have been cut by double digits since its last report, reflecting analysts negative sentiment towards the company. Just last month, Valeant confirmed Q1 earnings would fall within guidance given in its fourth quarter analyst call. Total revenue is expected in the range of $2.3-2.4 billion while EPS is forecasted in the range of $1.30-1.55.
For investors, the actual numbers are not as important as what is said during the analyst call. The company’s old strategy of profitability, splash acquisitions and drug price increases, is no longer viable. Investors still don’t have an idea for what to expect moving forward. Meanwhile, Valeant’s fundamentals remain frightening. The company had over $31 billion in long term debt at the end of 2015. Without the possibility of raising its drug prices, Valeant will struggle to finance its debt. The company has already received multiple default notices associated with delayed filings of financial reports to the SEC.

Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals Intl Inc

With all these big questions remaining, everything hinges on what CEO Joseph Papa has to say tomorrow. If he can put investor’s concerns to rest, the stock could be in store for a quick pop. Otherwise, shareholders should expect more of the same and perhaps another double digit decline.
Do you think VRX can beat estimates? There is still time to get your estimate in here!