JPMorgan Analyst Defends Valeant, Cites Continued Performance Of Two-Thirds Revenue

Valeant hosted a shareholder conference call on Monday morning, sharing updates on its businesses. Analysts at JPMorgan noted that, encouragingly, the call was focused on Valeant’s fundamentals, which seem to remain intact.

While the experts recognize the near-term business impact from the recent controversy surrounding the company’s dermatology and neurology franchises, they pointed out that management assured that the remaining businesses, which account for more than two-thirds of its total revenue, continue to perform satisfactorily.

While the analysts do understand that it is not easy to “quantify what will change sentiment,” they see Monday’s call as a good first step.

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Call Highlights

Below are a few highlights from JPMorgan’s report.

• 1. After discontinuing Philidor, Valeant is assessing alternative access programs. Management anticipates this will be in place within 90 days.
• 2. Although management sees near-term impact to its dermatology and neurology businesses, they believe the longer-term effects are limited.
• 3. The rest of the business units, which contribute more than 2/3 of revenue, continue to perform nicely. “The gastroenterology business continues to represent a growth driver for the company, particularly with Xifaxan scripts up 36 percent YoY QTD,” the experts expounded. “Management also noted 20 percent YoY growth QTD for the contact lens business, high-single-digit growth for the consumer business, and double-digit growth for the dental business, as well as double-digit operating growth in EM-Asia and high-single-digit operating growth in EM-EMEA.”
• 4. The analysts expect Valeant to de-lever quickly in 2016.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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