Valeant Upbeat About 2013 - Analyst Blog

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Valeant Pharmaceuticals International Inc. ( VRX ) recently provided its guidance for 2013. Valeant expects to generate additional revenue of about $1 billion in 2012, despite a $200 million decline due to the genericization of Cesamet in Canada, Cardizem CD, Ultram ER and Wellbutrin XL in the US.

Valeant expects to report revenue between $3.3 billion and $3.5 billion in 2012, up 40% year over year.

Same store sales are expected to experience organic growth of approximately 8% and pro-forma (including acquisitions) growth of approximately 10%.

Management is quite upbeat about its future prospects having launched quite a few patented and over the counter (OTC) products in 2012 such as Regederm in Brazil, Potiga in the US, Sublinox and Lodalis in Canada and many OTC line extensions such as the CeraVe family of products.

Meanwhile, along with organic growth, the company is pursuing acquisitions as well to boost overall growth in revenue.

In December 2012, Valeant acquired Medicis Pharmaceutical Corporation for $44.00 per share in cash. Medicis' portfolio includes prescription brands such as Solodyn, Restylane, Perlane, Ziana, Dysport and Zyclara.

Medicis' launch of Zyclara Pump in September in the US will further fuel top line growth in 2013. In addition, Valeant received regulatory approval for Dysport in Canada at the end of December and a lip indication for Restylane plus lidocaine in the US.

The company seems to progressing well with the Medicis integration with sales force product training to commence in late January. Valeant plans to have approximately 350 sales reps in the US targeting prescription dermatology, aesthetics and podiatry.

Medicis' pipeline is promising as well with Dysport scheduled to launch in Canada in the first quarter of 2013 and a regulatory application having been filed for luliconazole for athletes' foot. A regulatory application for MetroGel for vaginal infections will be filed in the first half of 2013.

For 2013, Valeant expects to generate revenue between $4.4 billion and $4.8 billion, up 30% from 2012, excluding potential acquisitions other than the Natur Produkt acquisition, scheduled to close in January. EPS is projected at around $5.45 - $5.75. Valeant expects generics to hit revenue by about $100 million.

Solodyn revenue is expected in the range of $250 million to $275 million in 2013. Valeant plans to divest several assets generating approximately $40 million to $50 million in annual revenue.

Valeant expects to obtain synergies over $275 million in 2013. However, the company does not expect these synergies to materialize before late 2013 as most of it relates to the restructuring of certain legal matters and the winding down of a number of R&D programs.

Valeant has been quite aggressive on the acquisition front in the last two years contributing to its solid growth. We are impressed by the company's broad product portfolio, strategic acquisitions and synergies obtained from the same. We believe that the lower tax rate and buyback of stock by the company will enable Valeant to achieve its goal in 2013.

Hence, we currently have an Outperform recommendation on Valeant Pharmaceuticals which carries a Zacks #1 Rank (Strong Buy).

Another stock which currently looks attractive in the pharmaceutical sector is Ironwood Pharmaceuticals, Inc. ( IRWD ) which carries a Zacks #1 Rank.

IRONWOOD PHARMA (IRWD): 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 Nasdaq, Inc.

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

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