Mizuho Co-Signs Shock Exchange; Valeant Likely To Raise Equity

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Wuyi, Coconut Rob, Shock Exchange, Professor Brogman stunt for the 'gram
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Valeant’s (VRX)stock has spiked about 30% over the past 10 days. Broader financial markets have hit record highs on a weekly basis, driven by talks of tax cuts and from President Trump. That rise has inured to the benefit of Valeant shareholders. The majority of that rise has been germane to Valeant. CEO Joe Papa has improved liquidity through asset sales and pushed out near term debt payments through refinancings. That has given analysts cover to raise price targets and allowed daytraders to continue to speculate in the shares.

VRX hit a 52-week high of nearly $23 last week on trading volume sometimes as much as three times its daily average. Mizuho analyst Irina Koffler believes management could use the run-up in the shares as an opportunity to issue an equity offering:

Analyst Irina Koffler reiterated an Underperform rating on the stock today, although she did raise he price target from $7 to $10. She writes that she had planned to upgrade Valeant, but then the stock ran up after its post-2020 debt refinancing and we believe the credit …

She warns that Valeant cold do “something dilutive with the stock at these levels,” which could lead to more downside. Koffler writes that while 2018 EBITDA guidance may not be “that disappointing,” but she’s not willing to abandon her bear thesis ahead of it. Her $3 price target increase comes from a lower litigation reserve and the value in case of a potential sale.

She believes Valeant might meet or exceed Q4 expectations but fall shy in 2018.

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