Jefferies analyst David Steinberg cut his price target for Valeant Pharmaceuticals (VRX) to $53 after the company’s outlook for FY16 came in “much lighter than expected.” Management’s credibility took a further hit and investors are now concerned about debt repayment and possible bond covenant violations, Steinberg tells investors in a post-earnings research note.
Steinberg points out, however, that his firm’s credit strategist sees minimal risk. Debt reduction is likely the best way to increase equity value, Steinberg contends. “All we can point to is 3rd party data (e.g., IMS Rxs) as evidence the co is real,” he writes. The analyst keeps a Buy rating on Valeant. The drug-maker closed yesterday down 51%, to $33.51.
