Valeant shares recover a bit after two-day slide

Tue Feb 23, 2016 9:39am EST
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Feb 23 (Reuters) - Shares of Valeant Pharmaceuticals International Inc were up more than 6 percent in early U.S. trading on Tuesday following a two-day selloff, with some analysts saying that selling of the Canadian drugmaker's stock had been overdone.

The shares, which were trading at $80.90 shortly after the opening, had fallen more than 19 percent since Friday after Wells Fargo initiated coverage with an "underperform" rating and a valuation of $65 to $68 per share.

The stock fell further in after-hours trading on Monday after Laval, Quebec-based Valeant said it would restate results for 2014 and 2015 after identifying some sales to drug distributor Philidor Rx Services that should have been recognized only when the drugs were dispensed to patients.

J.P. Morgan analyst Chris Schott said in a client note that given the narrow timeframe and the minimal revenue from the distribution of drugs through Philidor in late 2014 and 2015, he expected only a limited impact on historical results.

Valeant cut ties with Philidor Rx in October after it was revealed that the distributor had used aggressive tactics to try to increase insurer reimbursements, mostly for dermatology drugs, to help the Valeant inflate revenue.

The restatement will reduce its reported 2014 GAAP earnings by about 10 cents per share and increase 2015 GAAP earnings by about 9 cents per share, Valeant said.

"We view this as a marginal impact and certainly not one that warranted the significant pressure late in the day and after market yesterday," Stifel analyst Annabel Samimy wrote in a client note.

Valeant, whose Toronto-listed shares were up 6 percent at C$110.22, said it would release unaudited fourth-quarter results next Monday. (Reporting by Amrutha Penumudi in Bengaluru; Editing by Ted Kerr)