October 22, 2015 / 11:46 AM / 2 years ago

BUZZ-Valeant: The Street View

** Valeant Pharmaceuticals plunge overnight following Citron’s report cost investor billions but analysts at bulge-bracket banks sitting tight on recommendations

** UBS, BAML both sticking with “buy” ratings on the stock while Morgan Stanley and Deutsche Bank keeping their “equalweight” and “hold” ratings respectively

** As of Wednesday’s close only 1 analyst had a “sell” rating on the stock, according to StarMine

** BMO Capital Markets cut its rating on Valeant to “market perform” from “outperform” early Thursday

** Valeant long a bane to short sellers

** Shares are off 3 pct in US premarket trading. Almost $10 bln worth of Valeant shares traded on Wednesday across US venues with stock falling nearly 40 pct at its day’s low

A summary of analyst views so far:

** BofA-Merrill: reiterates “buy.” Under a worst-case scenario in which sales in the company’s US dermatology, neurology and other businesses (which have sales through the speciality pharmacy channel that Citron has questioned) drop to zero, BAML’s model calls for a $129 value for the stock.

** UBS: says Valeant’s clarifications should help stock recoup some losses as co makes clear it does not recognize sales from inventories held at pharmacies

** Morgan Stanley: keeps “equalweight” rating on stock. According to MS, Valeant’s clarifications have not addressed claims about questionable Philidor business relationships with other pharmacies. Broker adds that while not illegal, not common for pharma companies to directly own or control pharmacies. Broader concerns about speciality pharma overblown, MS adds

** Deutsche Bank: keeps “hold” on stock. M&A has been a big driver for Valeant and current focus on cutting leverage likely to dampen on any deal making. Uncertainties related to the US drug pricing environment, VRX’s specialty pharmacy distribution model, and related government inquiries keep the outlook cloudy (RM: vikram.subhedar.thomsonreuters.com@reuters.net)

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