Valeant Pharmaceuticals (VRX) Stock: Can The Gains Continue?

Valeant Pharmaceuticals Intl Inc (NYSE: VRX)

Valeant Pharmaceuticals has had a rough time over the past month to say the least. After Citron accused the company of being the pharmaceutical equivalent of Enron, we saw a drastic decline in the value of the stock. However, it seems as though times may be changing. After a couple pieces of good news, VRX is climbing in the market today. So today, we’ll talk about what the good news is, how the market is reacting, and what we can expect to see from the stock moving forward.

Valeant Enters Agreements With Walgreens

Today, VRX announced that it had entered into fulfillment agreements with Walgreens. This is just the first step the company is making with regard to its goal of extending its distribution model. According to the agreement, VRX will offer a 10% discount from the wholesale price on branded prescription-based dermatological and ophthalmological products for Walgreens. Ultimately, the agreement allows patients more efficient access to Valeant branded prescription and over-the-counter products. In a statement, J. Michael Pearson, Chairman and CEO of VRX had the following to say:

We have listened to what the marketplace is saying and we’ve taken positive steps to respond. We are pleased to announce both a strategic fulfillment agreement with Walgreens, as well as a new agreement to offer innovator products at generic prices, which is good for consumers, good for physicians and good for the healthcare system…. Our goal is to create a system that allows prescription medications to be dispensed and insurace claims adjudicated in an efficient manner while allowing physicians to focus their efforts on what matters most: patient care.”

Valeant Hires A Crisis Management Team

In other positive news, VRX announced yesterday that it has hired a crisis management team with political connections. Essentially, this plan is to combat the scrutiny with regard to drug pricing practices at VRX over the past few months. At this current moment, the FTC investigation of VRX with regard to their control of the lens sector and the idea that the company used Philidor to falsify sales and avoid auditory scrutiny has created a big issue. Ultimately, the crisis management team was hired to combat these issues.

How The Market Is Reacting To The News

Any time we see positive news with regard to a publicly traded company, we can expect to see gains in the stock. That’s exactly what we’re seeing today. Currently (10:31), VRX is trading at $108.17 per share after a gain of 14.90% so far today.

What We Can Expect To See Moving Forward

In my opinion, the worst part of the declines may be over. With the new agreements with Walgreens, VRX sales are likely to climb. However, I’m still a bit concerned with regard to the Federal investigation. If the findings of the investigation are negative, it could take a toll on the stock. With that said, before making any moves, I would personally wait until we hear more about the investigation.

What Do You Think?

Where do you think VRX is headed moving forward? Let us know your opinion in the comments below!

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