Piper Jaffray Reiterates OW Rating On VRX

Piper Jaffray is reiterating its OW rating on shares of Valeant Pharmaceuticals International, Inc. VRX. “Last night, Valeant announced that it is making an unsolicited offer to acquire Cephalon Inc. CEPH for $73 per share in an all-cash transaction,” Piper Jaffray writes. “Even with VRX potentially adding several hundred million dollars worth of annual interest expense, we believe the bid, if successful, could provide major EPS accretion in the context of estimated CEPH revenue of around $2.7B in 2013 (post-Provigil generic erosion) and major cuts to what we believe is a bloated R&D infrastructure for CEPH ($537M in estimated 2011 R&D), not to mention major cuts to overlapping SG&A (the cuts would be along the lines of what we saw following the merger with Biovail).” Piper Jaffray said that irrespective of the bid, “we continue to view VRX as one of the best cash flow stories in the specialty pharma space.” Valeant Pharmaceuticals International closed Tuesday at $44.39.