NEW YORK (TheStreet) -- Valeant Pharmaceuticals International (VRX) said it remains on the outlook for other companies, including makers of innovative contact lenses, as it attempts to take over Allergan (AGN) - Get Allergan plc Report, Reuters reports.
On a conference call with investors, Valeant CEO Michael Pearson said the company won't be content to remain the number four global player in the contact lens industry.
Shares of Valeant Pharmaceuticals are down -7.02% to $117 on very heavy trading volume this afternoon.
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 increase in net income. 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 6.3%. 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 36.16% 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 gross profit margin for VALEANT PHARMACEUTICALS INTL is currently very high, coming in at 74.95%. Regardless of VRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRX's net profit margin of -1.19% significantly underperformed when compared to the industry average.
- 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.