Valeant Pharmaceuticals Intl Inc (NYSE: VRX)
Valeant Pharmaceuticals is having a strong day in the market today, and for good reason. The company has announced the addition of new members to it’s Board of Directors, and investors are excited. Today, we’ll talk about what we’re seeing with regard to the Board of Directors, how the market is reacting to the news, and other reasons that I maintain a bullish opinion on VRX.
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VRX Announces 3 Additions To It’s Board
Early this morning, Valeant Pharmaceuticals announced that it has added new independent members to its board of directors. In fact, it has added three new independent directors. This is a much needed move considering the issues that the company has faced over the past several months. The additions to the VRX Board of Directors include:
- Stephen Fraidin – Stephen Fraidin is the vice chairman of Pershing Square Capital Management. According to Reuters, Pershing Square Capital Management is one of the largest investors with VRX, owning about 16.5 million shares.
- Fred Eshelman – Fred Eshelman is the former CEO of Pharmaceutical Product Development.
- Thomas Ross – Thomas Ross has served as the president of the University of North Carolina.
In addition to the new additions to the company’s board of directors, Anders Lonner has stepped down as director of the company. In a statement, Robert Ingram, chairman of the VRX Board of Directors had the following to say about the changes:
“Fred’s extensive experience in the pharmaceutical industry, Steve’s business, legal and corporate governance acumen, and Tom’s broad public policy expertise are valuable additions to the Board as we strengthen the company’s corporate governance practices and move the company forward…”
How The Market Reacted To The News
As investors, we know that the news ultimately moves the market. The news that new members of the Board of Directors were added is incredibly good news and will likely lead to solid changes in the company. As a result, we’re seeing strong movement in the value of VRX today. Currently (10:47), VRX is trading at $65.36 per share after a gain of $2.21 per share or 3.50%.
Why I Maintain A Bullish Opinion On VRX
When it comes to Valeant Pharmaceuticals, the news released today is just another bit of information that lends to the bullish opinion I maintain with regard to the stock. The company has been through quite a bit in a relatively short period of time, and to regain faith among investors, a management shift is a great move. However, it’s not the only reason I’m bullish on VRX. Here are some others:
VRX And Walgreens – Valeant’s problems started as the result of its relationship with Philidor, an underground pharmacy that seemed to be doing things the wrong way. While Philidor was Valeant’s largest customer, it was pressured by investors to cut ties with the pharmacy. As a result, VRX gave up quite a bit in revenue from the sales of their treatments at Philidor. But VRX has made up a large portion of the lost sales due to its newly found relationship with Walgreens.
VRX Price – Another factor that makes me bullish on Valeant Pharmaceuticals is the price at which the stock is trading. Following tremendous downtrends as a result of the Philidor issue, VRX is trading at an incredibly low price. While the company’s prescription sales are recovering, the price of the stock isn’t gaining quite as much, making it undervalued in my eyes.
Positive Strategic Changes – Since the Philidor issue, VRX has made several positive strategic changes, one of which happened today when the new members were added to the board of directors.
The bottom line here is that Valeant Pharmaceuticals is a great company. While it has been dealing with more than its fair share of issues, the company has proven its ability to overcome issues in the past, and I’m expecting no different today. All in all, I’m expecting to see great things out of VRX moving forward.
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What Do You Think?
Where do you think VRX is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]