Rating Change #7
Valeant Pharmaceuticals International Inc (VRX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.
Highlights from the ratings report include:
- VRX's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 51.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 93.82% to $167.33 million when compared to the same quarter last year. In addition, VALEANT PHARMACEUTICALS INTL has also vastly surpassed the industry average cash flow growth rate of -50.41%.
- 40.10% is the gross profit margin for VALEANT PHARMACEUTICALS INTL which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VRX's net profit margin of -1.50% significantly underperformed when compared to the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 299.3% when compared to the same quarter one year ago, falling from $6.48 million to -$12.92 million.
Valeant Pharmaceuticals International, Inc., a specialty pharmaceutical company, develops, manufactures, and markets pharmaceutical products in the areas of neurology, dermatology, and branded generics. The company has a P/E ratio of 115.2, equal to the average drugs industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Valeant Pharmaceuticals International has a market cap of $17.24 billion and is part of the health care sector and drugs industry. Shares are up 9.7% year to date as of the close of trading on Friday.You can view the full Valeant Pharmaceuticals International Ratings Report or get investment ideas from our investment research center.