Why Valeant Pharmaceuticals (VRX) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Valeant Pharmaceuticals Int'l. (VRX) are down -1.91% to $107.08 after ValueAct Capital, a top company shareholder, said it supports Valeant's independent business plan and doesn't believe the drugmaker has to buy Allergan (AGN), according to Reuters.

ValueAct likes a potential combination between Valeant and its takeover target Allergan, but said a drawn-out bidding war might be too distracting, Reuters reports

ValueAct has about a 5.7% stake in Valeant, and is its third biggest investor, according to Thomson Reuters data from May.

 

Shares of Allergan are down -2.07% to $153.59.

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, increase in stock price during the past year and increase in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

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

  • VRX's very impressive revenue growth greatly exceeded the industry average of 4.6%. Since the same quarter one year prior, revenues leaped by 86.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 1057.7% when compared to the same quarter one year prior, rising from $10.87 million to $125.80 million.
  • VALEANT PHARMACEUTICALS INTL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, VALEANT PHARMACEUTICALS INTL reported poor results of -$2.62 versus -$0.38 in the prior year.
  • The gross profit margin for VALEANT PHARMACEUTICALS INTL is rather high; currently it is at 53.61%. 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 6.16% is significantly lower than the industry average.
  • You can view the full analysis from the report here: VRX Ratings Report

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