Goldman Sachs says Valeant has long road ahead, cuts rating

Mon Nov 2, 2015 1:16pm EST
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By Ankur Banerjee

Nov 2 (Reuters) - Goldman Sachs on Monday downgraded Valeant Pharmaceuticals International Inc's stock, nearly two weeks after an influential short seller accused the Canadian drug maker of cooking its books.

While investors have fled the company's stock, which has lost a third of its value since Citron Research published its report on Oct. 21, sell-side analysts have remained stubbornly positive on the stock.

BTIG and BMO Capital Markets have lowered their ratings to "hold" in the past two weeks. Including Goldman, seven of the 22 brokerages covering the stock now have a "hold" rating, versus three a month earlier.

Only one brokerage - Veritas Investment Research - has an "underperform" or "sell" rating, while fourteen have "buy" or higher ratings.

"We expect a much longer road than we previously thought for the dust to settle," Goldman Sachs analyst Gary Nachman said in a note.

He cut his price target to $122 from $180 - the lowest on the stock.

Nachman, however, said he continued to believe that Valeant's strong fundamentals could justify a much higher valuation in the longer term.

None of the 10 analysts contacted by Reuters responded to emails requesting comment.   Continued...