Valeant's Guidance Looks Conservative

Valeant Pharmaceuticals Intl Inc VRX reported its Q4 2016 results in-line with expectations, but guidance for 2017 short of the consensus estimates.

“We believe this guidance is likely conservative based on the pacing on expected genericizations,” RBC Capital Markets’ Douglas Miehm said in a report.

Miehm maintained a Sector Perform rating on the company, with a price target of $22.

Q4 Review

Valeant reported quarterly revenue at $2.40 billion, higher than of RBC’s forecast of $2.37 billion forecast and the consensus estimate of $2.39 billion. Adjusted EBITDA came in at $1.05 billion, in-line with the RBC and consensus expectations. The company’s adjusted EPS was at $1.26, versus the RBC and consensus estimates of $1.23.

Related Article: Valeant's High Debt Load Puts Q4 Focus On EBITDA Guidance

Full Year Guidance

Valeant announced its 2017 revenue guidance at $8.9-$9.1 billion. The company projected adjusted EBITDA for the year at $3.55-$3.70 billion, short of RBC’s estimate $3.8 billon and the Street’s forecast of $3.9 billion.

Investor focus is likely to remain on the company’s 2017 guidance, which seems conservative, Miehm stated.

“Although we had noted for two weeks that we believed VRX would front-load ~$800MM in revenue impact due to LOEs [loss-of-exclusivity] in its 2017 guidance, we were unsure as to whether Valeant had adequately explained this to the Street,” the analyst wrote.

Shares were down more than 5 percent in the pre-market session.