Here's a Reason Why Valeant (VRX) Stock Is Lower Today
Shares of Valeant are falling after Wells Fargo cut its estimates on the stock and repeated its "underperform" rating, TheStreet TV anchor Rhonda Schaffler reports in the above video.
NEW YORK (TheStreet) -- Valeant Pharmaceuticals (VRX) stock is down 5.67% to $26.28 in mid-afternoon trading on Thursday after Wells Fargo (WFC) cut its estimates on the stock to reflect a fresh round of bonuses paid to members of its executive management team.
These are "the same executives that held managerial roles as Valeant faced major business, regulatory, legal, and accounting issues," senior analyst David Maris pointed out, Bloomberg reports. The payouts include a retention bonus of $1 million for each of three members and special equity awards valued between $1.25 million and $3.8 million.
"We are surprised by these bonuses as we believe this opens the company up to criticism of being brazen in the face of public and government scrutiny for pricing practices," Maris wrote in a note. "It is not hard to see the criticism that the retention bonuses are being paid with money Valeant gained through excessive price increases and being paid to executives who in part helped oversee these pricing programs."
The firm cut its valuation range on the stock to between $27 and $31 from $30 to $31 while reiterating an "underperform" rating.
Additionally, Valeant is reportedly exploring a sale worth up to $1 billion of some cosmetics and cancer drug assets in an attempt to diminish debt.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.
Valeant's weaknesses include its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
You can view the full analysis from the report here: VRX
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
