An analyst upgrade on Valeant Pharmaceuticals (NYSE: VRX), citing lower risks, is hardly a permanent catalyst that would explain the stock’s rally in recent sessions. Even at yearly highs, the stock is cheap at a forward P/E of around 7 times.
The company is not alone in the bargain bin. Teva Pharmaceuticals trades at similar discounts (NYSE: TEVA) while Endo International (NASDAQ: ENDP) is even cheaper. Endo’s earnings on May 8 sent the stock up over 30%, better than Valeant’s rally.
Analysts have an average price target of $21 on Valeant’s stock, according to TipRanks. Barclays’ Douglas Tsao, who has a 3-star rating, set a $29 price target. Valeant’s stock could easily close at that level, forcing other analysts to remove their hold or sell rating.
Of the 13 analysts covering VRX stock, five have a buy, four have a hold but a high of four have a ‘sell’ call.
Valeant’s B+L unit reported better results last quarter but must do so again in the next few quarters to attract stock buyers. The stock is still a speculation until it proves the turnaround is sustainable an and permanent. Pharma companies keep pushing drug prices up while PBMs do what they can to pass the costs back to them.
