Barclays analyst Douglas Tsao downgraded Valeant Pharmaceuticals (VRX) to Equal Weight from Overweight and cut his price target for the shares to $34 from $135. The drugmaker closed Friday down 9%, or $2.71, to $26.98. Tsao admits he underestimated the “lasting consequences” of Philidor as well as the near-term impacts of the company’s Walgreens (WBA) initiative.
The downgrade reflects the “greater uncertainties” facing Valeant over the next 12-18 months, the analyst tells investors in a research note. Tsao believes, however, that near-term catalysts such as successful consent with creditors and a “clean” annual report filing could drive shares above $50. Nonetheless, an inability to reach an agreement with creditors or lasting uncertainty around financials could pressure the equity, with $12 per share a possibility, the analyst writes.
