Valeant Provides Strong Guidance, Shares Up - Analyst Blog


Shares of Valeant Pharmaceuticals International, Inc. ( VRX ) jumped 11.30% on Jan 7, 2014 after the company provided strong guidance for 2014.

Valeant expects to generate revenues of $8.2 billion- $8.6 billion in 2014, up 40% from 2013.

Earnings per share, on a cash basis, are expected between $8.25 and $8.75. The current Zacks Consensus Estimate is $8.70, well within the company's guidance.

The guidance assumes a gross margin of 70%. Valeant expects the impact of generics to adversely impact revenues by more than $200 million in 2014 as compared to 2013, thereby hurting organic growth.

Valeant aims to complete the integration of Bausch+Lomb in 2014 and expects a major chunk of synergies ($850 million) by the second half of 2014. We note that Valeant acquired Bausch + Lomb in Aug 2013 to strengthen its ophthalmology business, which was a miniscule portion of Valeant's overall portfolio.

The company also plans to launch new key products - Bensal, Jublia, Luzu, Neotensil, PeroxiClear and Zeus - in 2014.

Moreover, Valeant expects to focus on the emerging markets - Middle East, Russia/CIS, and South East Asia.

The first half of 2014 will be burdened by heavy launch costs related to new products and costs associated with the expansion of the sales forces in Valeant's aesthetics and oral health businesses.

Meanwhile, Valeant reiterated its guidance for the fourth quarter of 2013 and full 2013. Valeant now expects revenues between $5.7 billion and $5.9 billion in 2013. Earnings per share, on a cash basis, are projected around $6.11-$6.16.

Revenues in the fourth quarter are expected above $2.0 billion. Earnings per share, on a cash basis, are expected around $2.05-$2.10.

The guidance for 2014 was positive. We are encouraged by the company's efforts to maintain momentum.

Valeant currently carries a Zacks Rank #3 (Hold). Right now, stocks like Forest Laboratories ( FRX ),  Sucampo Pharmaceuticals ( SCMP ) and  Jazz Pharmaceuticals Inc.  ( JAZZ ) look attractive. While Forest Labs and Sucampo carry a Zacks Rank #1 (Strong Buy), Jazz Pharma holds a Zacks Rank #2 (Buy).

FOREST LABS A (FRX): Free Stock Analysis Report

JAZZ PHARMACEUT (JAZZ): Free Stock Analysis Report

SUCAMPO PHARMAC (SCMP): Free Stock Analysis Report

VALEANT PHARMA (VRX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: FRX , JAZZ , SCMP , VRX

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