Valeant Pharmaceuticals International, Inc. (NYSE: VRX)
VRX is set to report its 2016 first quarter results Tuesday June 7, 2016 before the market open and the consensus is for earnings of $1.42 a share on revenues of $2.38 Billion. After the long, bumpy road VRX has recently experienced is there a chance for a surprise?
In our last discussion on VRX we identified the longer term, fully developed falling wedge pattern on the daily chart. Since then, VRX has broken out to the upside of the wedge but lacked one vital factor: Volume. Due to the lack of volume, and in result no follow through, VRX may still have some time ahead before it can make the explosive move higher that is expected on a falling wedge break. Currently, VRX is drifting back toward the descending resistance speed line of the falling wedge which could result in a retest, or accumulation, before the break into higher territory. Keep VRX on close watch as we move into the earnings report as the setup can still make for a strong move.
The analyst team at Canaccord Genuity had the following outlook on VRX.
Valeant will report Q1/16 financial results on June 7th. We forecast revenue of $2.4 billion, representing a sequential decrease of (15.1%); this is exactly in line with consensus and at the top end of Valeant’s tightly guided range. Going into the print, we expect that many of the issues that have dogged the company in 2015 are likely to spill over into the first quarter. We expect continued lost sales resulting from the termination of Philidor and potential challenges associated with the implementation of the Walgreens distribution agreement. Further, we expect pricing headwinds to grow as many insurers now feel they have the ‘political license’ to push back on past practices. Ahead of the quarter, we have made modest adjustments to our forecasts, lowering our full-year gross margin estimate given likely price headwinds and the potential for higher rebates to managed care. We have also updated our adjusted EPS for a mechanical error and now include reported taxes within the guided range of 10% to 15%. However, we note that these are non-cash taxes and therefore have no impact on our DCF valuation. VRX Q1 preview: More bumps in the road ahead
About Valeant Pharmaceuticals International, Inc.
Valeant Pharmaceuticals International, Inc., incorporated on August 9, 2013, is a specialty pharmaceutical and medical device company. The Company is engaged in developing, manufacturing, and marketing a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over 100 countries. The Company focuses on eye health, dermatology and neurology therapeutic classes, primarily on branded generics, OTC products and medical devices. The Company operates through two segments: developed markets and emerging markets.