Long-Time Valeant Bull Jefferies Cuts Price Target 40%

Jefferies' David Steinberg maintained a Buy rating on Valeant Pharmaceuticals Intl Inc (NYSE: VRX), while lowering the price target from $172 to $106.

Steinberg mentioned that CEO Mike Pearson had returned to his position following a severe bout of pneumonia. At the same time, the company withdrew its 2016 guidance, while the 10K filing has been delayed while Valeant Pharma determines the proper accounting for Philidor.

"As Mr. Pearson has been the architect behind VRX's 'disruptive business model' – including most recently developing the innovative distribution agreement with Walgreens Boots Alliance Inc (NASDAQ: WBA) – on balance it's a positive to have him back at the helm," Steinberg said.

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Another positive for the company was that the board did not discover anything illicit during its review of Valeant Pharma's business.

However, the analyst stated that the withdrawal of the guidance was a negative and indicative of potentially "wider than perceived" issues at the company. Steinberg believes that a meaningful cut in the guidance might be in the offing.

According to the Jefferies report, "There are a myriad of cross-currents in the business and so much remains unknown. And as if there wasn't already enough uncertainty, it's unclear when VRX will report unaudited FY15 financials and how long it will take for the company to complete its accounting audit and file updated financials (10-K)."