Goldman Sachs analysts Dana Flanders and Christopher Staral initiated coverage on the stock with a Sell rating and an $18 price target on Wednesday, warning that while Valeant has made plenty of progress executing in its core business and reducing its debt, they're concerned about its balance sheet and ongoing litigation risk.
They write that Valeant's near-term outlook is "muted" given competition for its key products, and with consensus estimates moving lower, there's better opportunity elsewhere in the sector. (They initiated Catalent (CTLT) with a Buy rating.)
Elsewhere, Piper Jaffray's David Amsellem and Michael Ingerman reiterated their Underweight rating and $12 price target on the stock today, writing that Valeant's rally "makes no sense."
They believe that the rally has hinged on liquidity and bankruptcy risk. Looking past this, they warn that little has changed in terms of Valeant's challenged fundamentals. Moreover, they don't think that Valeant's new product launches will be enough to result in sustainable earnings growth, and it still faces loss of exclusivities.
Valeant is down 6.8% to $20.79. It's roughly flat since the start of 2018, but has gained more than 50% in the past year.