“How do we get comfortable that Valeant is able to execute and deliver for shareholders?”
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Once one of Canada’s largest companies, Valeant has seen its stock price crater to about $91 from a week high of $348, with its market capitalization more than halved since October alone.
Mutual fund manager Ruane Cunniff & Goldfarb, manager of the Sequoia Fund and the company’s biggest holder of Valeant shares, lost $1.26 billion on the investment.
Raffat didn’t immediately respond to a request for comment Wednesday about whether he planned to change his rating or target.
And while he deems it unlikely that the company will default, “the above factors have caused investors to lose total confidence in the company”, he added. The company fell -35.50 points or 33.54% with negative move.
For the full year, the company expected earnings of $9.50 to $10.50 a share.
Gastrointestinal and Dermatology drugs, which until just recently had been key drivers of growth are coming up short.
The company’s average forecast for sales for the current quarter finishing Dec 15 is $2.75B by 17 analyst Gurus.
Valeant began a conference call at 12pm London time.
The company’s stock plunged 18.93% in pre-market today.
After adjustments, Valeant says it earned US$875.7 million or $2.50 per share.
Valeant’s troubles mounted late past year when questions were raised about its drug pricing and allegations emerged that it was using distributor Philidor RX Services to inflate dermatology revenue. The stock price of Valeant has declined by 6 percent following the return of J. Michael Pearson, who took a medical leave for two months. At the same time, Valeant pulled its financial guidance and delayed reporting fourth-quarter results, saying it would wait until a board committee had finished an investigation of Philidor.
Valeant Pharmaceuticals International Inc cut its 2016 revenue forecast by about 12 per cent and said a delay in filing its annual report could pose a default risk. However, Raffat said that now he is trying to figure out whether the company’s business problems will extend through 2016. That compares to consensus estimates from Thomson Reuters of $2.61 in EPS on $2.75 billion in revenue.
Then, on February 22, Valeant said it would restate some of its past earnings after reviewing its relationship with Philidor.
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Valeant had earlier revealed it had wrongly booked some $53 million in sales in 2014 that should have been reported as 2015 income. In looking further ahead, potential investors should note that the company’s price to next year’s EPS estimates is 3.0543. If the 10-K report is not filed by March 16, Valeant would in breach of its reporting contract.
