NEW YORK (TheStreet) -- Shares of Valeant Pharmaceuticals International (VRX - Get Report) are down -1.72% to $124.459 after Allergan (AGN - Get Report) turned down a new bid, this one for $53 billion, as their takeover battle rages on.
Allergan said the bid undervalues the company and is too risky for shareholders.
Allergan CEO David Pyott said today that he is an "endurance player" who is prepared for a long, drawn-out effort to fend off a hostile takeover attempt by Valeant and its ally, hedge fund billionaire William Ackman, Reuters reports.
TheStreet Ratings team rates VALEANT PHARMACEUTICALS INTL as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALEANT PHARMACEUTICALS INTL (VRX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VRX's very impressive revenue growth greatly exceeded the industry average of 5.3%. Since the same quarter one year prior, revenues leaped by 76.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 52.49% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the Pharmaceuticals industry average, but is less than that of the S&P 500. The net income increased by 17.9% when compared to the same quarter one year prior, going from -$27.53 million to -$22.60 million.
- The debt-to-equity ratio is very high at 3.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, VRX maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, VALEANT PHARMACEUTICALS INTL's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: VRX Ratings Report