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Valeant target cut to $10 by JP Morgan

April 21, 2017

JPMorgan lowered its price target on Valeant Pharmaceuticals (NYSE: VRX) to $10.00 (from $15.00) while maintaining a Neutral rating, following a review of small to medium Specialty Pharmaceutical companies ahead of first quarter earnings reports, as sentiment for the group appears to be reaching a floor with some names seeing a positive bump driven by shifts in management, unexpected EBITDA performance and a return of generic M&A interest. Yet concerns remain regarding the sustainability of generic pricing metrics, coupled with the high leverage facing the management teams of this group.

Analyst Chris Schott notes VRX maintains a reasonable set-up into the company’s 2017 first quarter report, suggesting potential EPS upside to the Street’s estimates driven by near-term efforts, despite the shaky long-term outlook, as management faces an uncertain recovery of its franchise. For investors, core product performance will take center stage, while management’s comments on debt repayment, asset sales and refinancing will be a focus for the JP Morgan analyst, with Siliq (IL-17) launch an upcoming catalyst for the company.

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