Why Valeant Pharmaceuticals Is Getting Investors' Attention

1 2 3 4 5 6 7 8 9 10 11 12 13
Part 3
Why Valeant Pharmaceuticals Is Getting Investors' Attention PART 3 OF 13

Valeant’s Net Profit Margins Expected to Narrow in 2017

Net profit margins

Valeant Pharmaceuticals (VRX) has projected its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to fall $3.6 billion–$3.7 billion. Besides lower revenue, the company will also have to bear $1.9 billion in cash interest in 2017, which includes $100 million in amortized deferred financing costs.

Valeant&#8217;s Net Profit Margins Expected to Narrow in 2017

Interested in VRX? Don't miss the next report.

Receive e-mail alerts for new research on VRX

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Wall Street analysts have projected that Valeant’s 2017 adjusted non-generally accepted accounting principles (or non-GAAP) net profit margins would be around 15.5%, which represents a year-over-year (or YoY) narrowing of around 430 basis points.

If Valeant manages to surpass these net profit margin projections in 2017, its share price and that of the Global X Top Guru Holdings Index ETF (GURU) may be affected positively. Valeant makes up about 0.19% of GURU’s portfolio.

In 2017, peers Regeneron Pharmaceuticals (REGN), Alexion Pharmaceuticals (ALXN), and Incyte (INCY) are expected to report adjusted non-GAAP net profit margins close to 27.7%, 34.5%, and $5.3%, respectively.

Late-stage research pipeline

On February 16, 2017, AstraZeneca and Valeant Pharmaceuticals announced that the FDA has approved Siliq (brodalumab) as a therapy for moderate-to-severe plaque psoriasis in adult patients. On February 27, 2017, Valeant declared that it had refiled a new drug application (or NDA) for latanoprostene bunod ophthalmic solution, a treatment option for open-angle glaucoma (or OAG) patients. On December 8, 2016, Valeant announced positive results of a phase 3 trial evaluating IDP-118 as a therapy for plaque psoriasis patients.

On February 21, 2017, Valeant entered into an agreement with EyeGate Pharma to obtain global manufacturing and marketing rights for its EGP-437 combination therapy and EyeGate II Delivery System, which is used as post-operative care for ocular surgery patients. On February 23, 2017, Valeant entered into a collaboration with Nextcell Medical to further strengthen its Obagi skincare franchise. Valeant is also expanding its Bausch & Lomb lens portfolio in 2017.

By focusing on its late-stage research pipeline, Valeant expects to restore its profitability. In the next article, we’ll explore the impact of headwinds on the performance of Valeant’s business segments in 2016.


Please select a profession that best describes you: