Rodman & Renshaw Lowers Valeant's Target After Interest Expense Calculation, Still Sees $100+

Valeant Pharmaceuticals Intl Inc (NYSE: VRX) announced last week it had reached an agreement with a majority of its creditors regarding a proposed amendment and waiver to its credit facility.

Rodman & Renshaw’s Raghuram Selvaraju reiterated a Buy rating on the company, while lowering the price target from $118 to $105.

Amendment & Waiver

According to the company’s announcement, a majority of its creditors had approved that agreement that permitted Valeant to file its 10-K for 2015 by May 31, 2016, and its 10-Q for 1Q16 by July 31, 2016.

“The company anticipates closing the amendment and waiver agreement this week,” Selvaraju mentioned.

The analyst also pointed out that Valeant had announced its ad hoc committee had closed its investigation into Philidor issue, without having uncovered any further accounting irregularities.

Future Expectations

The company expects to file its Form 10-K by the end of April.

According to the Rodman & Renshaw report, the company’s creditors are required to pay Valeant “a fee of $50,000 per $10M loan tranche and boost interest rates on the debt by a percentage point,” in exchange for the modification of the terms of the credit facility.

Selvaraju believes the company was unlikely to sell any of his core assets in the near term.

The EPS estimates for 2016 and 2017 have been lowered from $8.79 to $8.15 and from $11.80 to $11.30, respectively.