This stock is so bad it’s good. Anything better than the CEO resorting to panhandling at Penn Station to meet the quarter gets the stock going higher again. Lo and behold, the company reported an earnings miss (only by 8 cents) and the stock is ripping higher because of it.
Why?
Free cash flow is up and guidance was in line.
For the love of God, the company is guiding estimates towards $7 in earnings for the year, putting VRX in the value camp at just 3x earnings.
Reports Q2 (Jun) earnings of $1.40 per share, $0.08 worse than the Capital IQ Consensus of $1.48; revenues fell 11.4% year/year to $2.42 bln vs the $2.45 bln Capital IQ Consensus.
Business update:We have taken steps to streamline our portfolio in the second quarter. We have sold, or agreed to sell, the brodalumab EU rights, Synergetics USA OEM business, and Ruconest for a total combined upfront payment of $181 million and additional consideration up to $329 million for achieving specific approval and sales milestones.
Specific to Ruconest, today the Company entered into a definitive agreement to divest all North American commercialization rights to Ruconest (recombinant human C1 esterase inhibitor) to Pharming Group N.V. Under the terms of the agreement, Pharming will pay Valeant aggregate consideration of up to $125 million, including an upfront fee of $60 million payable upon closing and certain sales-based milestone payments of up to $65 million. The transaction is subject to customary closing conditions, in addition to Pharming obtaining certain financing. Ruconest was classified as held for sale as of June 30, 2016 and an impairment loss of $199 million was recorded in the second quarter of 2016.
Cash flow from operations was $448 million in the second quarter of 2016 as compared to $411 million in the second quarter of 2015, an increase of 9% over the same period in 2015.
“We continue to make progress towards stabilizing the organization,” said Joseph C. Papa, chairman and chief executive officer. “We are also announcing a new strategic direction for Valeant today, which, at its heart has a mission to improve patients’ lives, and will involve reorganizing our company and reporting segments. I am continuously encouraged by the commitment of our employees who work hard daily, rebuilding our relationships with prescribers, patients and payors, and regaining the trust of our debt holders and shareholders.
Although it will take time to implement and execute our turnaround plan, I am confident that we will show progress in the coming quarters.”
Co reaffirms guidance for FY16, sees EPS of $6.60-7.00 vs. $6.52 Capital IQ Consensus Estimate; sees FY16 revs of $9.9-10.1 bln vs. $9.98 bln Capital IQ Consensus Estimate; continues to see Adj-EBITDA of $4.8-4.95 bln
If this stock traded at just 10x earnings, the price would be $70.
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