Rodman & Renshaw Doesn't Mind Valeant Default Notice, Says 'Unlikely' To Cause Concern Near-Term

Valeant Pharmaceuticals Intl Inc (NYSE: VRX) announced on April 12 that it had received a notice of default from Centerbridge Partners L.P., one of its bond holders.

Stating that this notice was not a cause for near term concern, Rodman & Renshaw’s Raghuram Selvaraju maintained a Buy rating on the company, with a price target of $105.

Notice Of Default

Selvaraju mentioned that the notice did not “accelerate any of Valeant's indebtedness, and under the covenants Valeant currently has in place with its creditors, the company has 60 days to cure the condition that led to the default notice, namely the delay in the filing of its 2015 Form 10-K.”

This means that the default situation would be rectified if the company filed its Form 10-K by June 11.

Given that Valeant Pharma has repeatedly stated that it intends to file by the end of April, Selvaraju believes that “it is highly unlikely that this notice would lead to an actual default.”

The analyst also pointed out that Centerbridge was not in a position to force Valeant Pharma to agree to further concessions and that it would not be in Centerbridge’s best interest to force an actual default.

“Intriguing” Stock

Selvaraju believes that the company continues to be an “intriguing” choice in the specialty pharma space, pointing out that companies in the industry have been facing huge pressure in recent months.

“However, we maintain our view that Valeant, with its significantly greater diversification across both clinical indications and product types, along with its presence in medical devices and consumer health, is better positioned to weather market pressures than many of its more-specialized competitors,” the analyst added.