Is Valeant Pharmaceuticals Intl Inc a $250 Stock?

Barclays analysts see Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX) as an overlooked growth story. Is now the time to buy?

| More on:

Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX) has a long history of growing through acquisitions. In fact as I write this article it is rumoured to have secured financing to purchase Salix Pharmaceuticals.

Last year the company had a failed bid for Allergan Inc. (NYSE:AGN), but with so much pressure on the company to continue growth through successful acquisitions, would another failure spell doom for the stock? Analysts at Barclays don’t think so. In fact, they are certain that  Valeant is worth US$200 (which at the current USD$/CDN$ exchange rate pegs the stock at over CDN$250 per share.)

A growth story, with or without acquisitions

Barclays analysts believe that the market does not fully appreciate the growth prospects of the company. They are projecting 2015 and 2016 earnings per share of US$10.36 and US$12.09. These estimates do not include any acquisitions, and with Valeant’s track record, an acquisition is always a possibility.  

Valeant’s Products

One of the strengths of Valeant has been its ability to acquire companies with mature products, saving greatly on the development risk and cost of pharma products. Many Valeant analysts have come to rely on the company to grow its revenue through a consistent stream of acquisitions, but the fact is that the company has enough products in its ownership to propel near-term growth.

Valeant is targeting growth through three avenues. First, it already has an impressive amount of products in development that it can launch over the coming years. Also, the company has recently launched products that could provide immediate-term sales increases while at the same time targeting increased sales in already existing products through improved marketing initiatives.

So, is $250 per share in the cards?

Valeant’s failed attempt to acquire Allergan Inc. put the company’s business under a little more scrutiny, and the company has stepped it up by working on its own internal products and financial position. Some analysts actually cheered the failed Allergan bid as a blessing in disguise as it would encourage Valeant to strengthen its already owned products while improving its financial position.

But, in addition to the company’s improved position it is apparent that Valeant is still interested in acquisitions, and through this growth it is wise to expect some upside in the company’s stock value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Leia Klingel has no position in any stocks mentioned. Tom Gardner owns shares of Valeant Pharmaceuticals. The Motley Fool owns shares of Valeant Pharmaceuticals.

More on Investing

Electricity high voltage pole and sky
Dividend Stocks

Should You Buy Algonquin Stock Now or Wait?

Algonquin Power stock has a massive 9.8% dividend yield today! Is now the time to buy or should income investors…

Read more »

A worker gives a business presentation.
Bank Stocks

BMO Stock Rose 6% in November: Is it a Buy Today?

Is it time to buy BMO stock?

Read more »

tsx today
Energy Stocks

TSX Today: Stocks to Watch on Monday, December 5

Canadian stocks may remain volatile ahead of the Bank of Canada’s upcoming interest rate decision due on Wednesday.

Read more »

Double exposure of a businessman and stairs - Business Success Concept

Better Buy: RBC Stock or the Entire TSX?

Royal Bank of Canada (TSX:RY) is a robust stock, but the index fund could be better long term.

Read more »

Family relationship with bond and care

Retirees: 2 Top TSX Dividend Stocks to Buy for TFSA Passive Income

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Metals and Mining Stocks

Beat the TSX With This Unstoppable Dividend Stock

This dividend stock continues to outpace the TSX and then some, providing you with a dividend that you'll want to…

Read more »

Energy Stocks

Here’s My Top Stock to Buy Now, and it’s Not Even a Question

Tourmaline is a quality energy stock trading on the TSX. Here's why I remain bullish on TOU stock right now.

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Selling Losers Before 2023? Buy These 2 TSX Stocks With the Proceeds 

There is one month to 2023. Now is the time to sell your loss-making stocks, take the tax advantage, and…

Read more »