) has posted four straight positive earnings surprises and is now a
Zacks #1 Rank (Strong Buy).
Valeant Pharmaceuticals International, Inc., a specialty
pharmaceutical company develops pharmaceutical products in the
areas of neurology, dermatology, and branded generics. It offers
Wellbutrin XL to treat depressive disorders and Xenazine to treat
chorea associated with Huntington's disease. Other drugs include
CeraVe to rebuild and repair skin barrier and Kinerase, a cosmetic
product. The company was formerly known as Biovail Corporation and
changed its name to Valeant Pharmaceuticals International, Inc. in
September 2010. The company was founded in 1960 and is
headquartered in Montreal, Canada.
Valeant Pharmaceuticals Tops Estimates in Four Straight
Valeant Pharmaceuticals topped the Zacks Consensus Estimate in each
of the last four quarters. The average beat has been $0.07.5 above
the Zacks Consensus Estimate which works out to be an average beat
of 9.2%. In the session following the earniings release has seen
VRX move higher two times and lower two times in the last four
reports. The average of these four moves is a decrease of 3.4%.
The largest positive price movement in the stock came the day after
the company reported the September 2011 quarter. Valeant
Pharmaceuticals meet the topline estimate of $570 million, a year
over year increase of 174%. EPS of $0.62 was $0.05 higher than the
$0.57 Zacks Consensus Estimate and the stock moved higher by more
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Valeant Pharmaceuticals Most Recent Reported
On May 3, 2012 Valeant Pharmaceuticals reported revenue of $856
million, about $55 million more than the Zacks Consensus Estimate
and up from $565 million reported in year ago quarter, an increase
of 55%. Earnings per share came in at $1.14, $0.17 higher than the
Zacks Consensus Estimate of $0.97. The beat of 17.5% didn't do much
for the stock as investors sold forcing the stock lower by 9.8% in
the session following earnings.
Valeant Pharmaceuticals Sees Estimates Moving
Valeant Pharmaceuticals has seen earnings estimates move higher
following the recent positive earnings surprise. The Zacks
Consensus Estimate for 2012 was as low as a loss of $4.00 in
January 2012 and has since moved higher to $4.40.
Similarly, estimates for 2013 have moved from $4.58 to $4.82 over
the same time frame.
Valeant Pharmaceuticals has a very attractive valuation. While
trailing twelve months PE multiple of 14x is great than the 11.8x
industry average, the forward PE multiple of 10.7x is below that of
the industry average at 11.8x. Price to book of 3.5x is in line
what you would expect for a growth company, but is higher than the
industry average of 1.9x. Similarly, a price to sales ration of
5.3x is much higher than the 1.9x industry average.
A look at the price and consensus chart shows a stock that was
ahead of estimates throughout most of 2010 and 2011. Earnings have
only recently caught up with the stock, but earnings continue to
grow. This implies that the stock will likely continue on a higher
trend over the next several quarters. The large gap between 2011
and 2012 estimates is the type of growth the aggressive growth
investors tend to look for. Valeant Pharmaceuticals is a Zacks #1
Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
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