Valeant Pharmaceuticals’ (TSX:VRX, NYSE:VRX) fourth quarter results were in-line with his expectations, but Canaccord Genuity analyst Neil Maruoka says the company’s guidance for 2017 was disappointing.
This morning, Valeant announced its fourth quarter and fiscal 2016 results. In the fourth quarter, the company posted (all numbers in U.S. dollars) Adjusted EBITDA of $1.05-billion on revenue of $2.4-billion, a topline that was down 12.7 per cent from the $2.75-billion the company posted in the same period last year.
“Today, we announced financial results that delivered on expectations and demonstrated our commitment to creating the new Valeant,” said Joseph C. Papa, chairman and chief executive officer. “Over the past few months, our teams worked to stabilize and strengthen our core businesses, resolve legacy issues, improve operational processes, launch new products, and improve the balance sheet and capital structure. We paid all 2017 amortizations and reduced debt by $519-million in the fourth quarter. We agreed to divest a number of assets, including several skincare brands, our Dendreon business and smaller international interests. The U.S. Food and Drug Administration (FDA) approved our new psoriasis treatment, Siliq, and we resubmitted our glaucoma treatment, latanoprostene bunod, in February, 2017.”
Maruoka says Valeant had a pretty good quarter, at least compared to expectations. He notes that the company’s EPS of $1.26 was above his expectation of $1.16 and the street consensus of $1.22. Its EBITDA was almost exactly in line with what he and the street had modeled, and revenue was a touch higher than his $2.3-billion expectation.
But the analyst says Valeant’s guidance for 2017 was concerning. He says the company’s expectation of $3.55 to $3.7-billion on revenue of $8.9 to $9.1-billion for the year was below his expectations. He worries that the numbers could end up being even worse.
“Despite commentary on last quarter’s conference call that foreshadowed lower sequential full-year revenue and adjusted EBITDA in 2017, Valeant provided guidance for this year that was nonetheless below expectations,” he says. “Moreover, as we realized near the end of today’s conference call, the impact from recent divestitures was not included in this guidance, suggesting that the range could be adjusted even lower over the course of the year as these acquisitions close.”
In a research update to clients today, Maruoka maintained his “Hold” rating and one-year price target of (U.S.) $19.00 on Valeant.