NEW YORK (TheStreet) -- Shares of Valeant Pharmaceuticals International (VRX) were gaining 2.6% to $203.87 Monday following a report that William Ackman's Pershing Square Capital Management purchased a stake in the drug company.

The hedge fund purchased a $3.3 billion stake in Valeant, giving it a 5% stake in the Canadian drug company, according to Reuters. Pershing Square Capital reportedly started building its stake in the company earlier this year.

Pershing Square Capital will take a passive approach to Valeant and not push the company's management to pursue strategic options, according to Reuters.

Valeant previously asked Ackman for help in 2014 to acquire Allergan (AGN) - Get Report, which prevented the hedge fund manager from purchasing stock in the company. Ackman's new position comes months after Allergan sold itself to Actavis (ACT) - Get Report instead of Valeant.

TheStreet Ratings team rates VALEANT PHARMACEUTICALS INTL as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate VALEANT PHARMACEUTICALS INTL (VRX) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The revenue growth came in higher than the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 10.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
• VALEANT PHARMACEUTICALS INTL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VALEANT PHARMACEUTICALS INTL turned its bottom line around by earning $2.67 versus -$2.62 in the prior year. This year, the market expects an improvement in earnings ($10.41 versus $2.67).
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 332.2% when compared to the same quarter one year prior, rising from $123.77 million to $534.90 million.
• The gross profit margin for VALEANT PHARMACEUTICALS INTL is rather high; currently it is at 55.21%. 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 23.46% significantly outperformed against the industry.
• Powered by its strong earnings growth of 333.33% and other important driving factors, this stock has surged by 40.52% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
• You can view the full analysis from the report here: VRX Ratings Report