Valeant's New-Old CEO: What To Know

Valeant Pharmaceuticals Intl Inc's VRX Chief Executive Michael Pearson, who just got back from a two-month sick leave, has his job cut out. The Canadian pharma company is facing several issues including delayed filing of its 10-K, a potential earnings restatement, withdrawn 2016 outlook, and the lack of clarity on the recently disclosed SEC probe. The ongoing weak scenario at the company led to a series of downgrades, with the latest being Canaccord Genuity's Neil Maruoka who cut VRX to Hold from Buy and price target to $75 from $125. He said that lack of transparency and clear communication by the company had eroded investor confidence. Read more: http://www.benzinga.com/analyst-ratings/analyst-color/16/03/6780079/canaccord-cuts-valeant-to-75-says-silence-is-deafening#ixzz41lW7TSEp "It looks like Mike was not able to keep up with the day-to-day for the company during his leave of absence, so it will take some time to get his arms back around the business," UBS analyst Marc Goodman wrote in a note to clients. The CEO's focus is to report 4Q, get full results from the special committee, file the 10K, and provide updated 2016 guidance. It sounds like the plan is to get these things done over the next few weeks. Although he has no control over timing of the special committee, it does sound like this should be done soon, i.e, not months from now. On the Walgreens deal, Goodman said it looks like it's going a little better than expected from the perspective of physicians writing Rxs. But, the analyst said it is important to point out that the first quarter will need to absorb a lowering of inventories, as the new relationship with Walgreens changes the dynamic of what distributors need to hold in the channel. "But investors should be well aware of these issues and are likely prepared for guidance to come down some," Goodman noted. Goodman, who has a Buy rating and $213 price target on VRX shares, said the stock is trading on fear of the unknown and believes the fundamentals of the overall business are currently not valued appropriately. "We would expect the stock to improve as Valeant gets current on its financials and investors get confident in the numbers and the special committee finishes its probe," Goodman added. Shares of VRX were up 2.5 percent to trade at $67.10. They were down 67 percent in the last one year.