Valeant Pharmaceuticals Intl Inc (NYSE: VRX)
Valeant Pharmaceuticals is having a rough day in the market today, following up on losses that we saw from the stock yesterday. The reason for the decline is relatively simple. The company reported earnings that were well below expectations and guidance wasn’t much better. Nonetheless, don’t count VRX out just yet! Today, we’ll talk about earnings, how the market reacted to the news, and why the stock can still climb moving forward.
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VRX Releases Upsetting Results
As mentioned above, Valeant Pharmaceuticals is having an incredibly rough time after reporting earnings for the first quarter. Here’s what we saw from the report:
- Earnings Per Share – In terms of earnings per share, VRX missed the mark in a big way. During the quarter, analysts were expecting that the company would generate earnings in the amount of $0.28 per share. However, the company actually generated a loss in the amount of $1.08 per share, missing expectations by a wide margin.
- Revenue – In terms of revenue, VRX also missed the mark. The company saw revenue increase by 9.3% quarter-over-quarter, but analysts were expecting to see the figure come in at $2.38 billion while the company actually reported revenue in the amount of $2.37 billion.
- Guidance – While both earnings and revenue proved to be concerning, the most concerning part of the report proved to be guidance. Valeant Pharmaceuticals has reduced its full-year outlook yet again. For the year 2016, VRX is expecting to generate earnings between $6.60 and $7 per share. This falls well short of the previous guidance between $8.50 and $9 per share, as well as analyst estimates, which sit around $8.47 per share.
While the report was overwhelmingly negative, the company has made progress with regard to stabilizing the organization following the Philidor scandal. In a statement, Joseph Papa, CEO at VRX, had the following to offer:
“We have made progress toward stabilizing the organization over the past few months, and we expect to file our financial results in a timely manner going forward… Valeant Pharmaceuticals has a portfolio of world class brands, a strong new product pipeline and dedicated leaders who are committed to doing what is right and what is necessary to turn this company around by re-engaging our workforce, rebuilding our relationships with prescribers, patients and payors, and regaining the trust of our debtholders and shareholders.”
How The Market Reacted To The News
As investors, one of the first things that we learn is that the news moves the market. Any time there is positive news released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company as a result. However, the news that was released surrounding VRX was anything but positive. As a result, we’re seeing declines in the value of the stock at the moment. Currently (12:28), VRX is trading at $23.82 per share after a loss of $0.82 per share, or 3.33%, thus far today. This follows the wide losses we saw from the stock yesterday as well.
VRX Can Still Climb
There’s no denying the fact that the earnings report released by Valeant Pharmaceuticals was overwhelmingly negative. However, it’s important to keep in mind that this was the first report since the Philidor scandal. Since the scandal, we’ve seen a CEO change, board changes, and an agreement signed with Walgreens. Not to mention, with the 70%+ decline we’ve seen since the scandal, the bad news was already priced in. Moving forward, I’m expecting Joseph Papa to do wonderful things with VRX. With a strong pipeline, great products, and a willingness to claw its way out of the hole it currently sits in, VRX looks like it’s poised to head upward in the long run.
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