(Reuters) - Goldman Sachs on Monday downgraded Valeant Pharmaceuticals International Inc's (VRX.TO) (VRX.N) 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.
Valeant's shares rose as much as 10 percent on Monday after Citron said it would not be releasing new allegations against Valeant, but would continue to investigate and report "the vast spectrum of claims now piling up" against the company.
The shares gave up most of their gains to trade up 4 percent at $97.978 in afternoon trading.
Jefferies and Canaccord Genuity also cut their price targets on Monday. The median price target on the stock has fallen to $196.50 from $287.50 in a month, according to Thomson Reuters data.
Citron had accused Valeant of using specialty pharmacy Philidor to create "phantom accounts" to inflate sales. Valeant denied any wrongdoing and on Oct. 30 said it ended its ties with Philidor.
Philidor accounted for 6.8 percent of Valeant's total revenue in the latest quarter.
Bill Ackman, the company's second-largest shareholder, told investors on Friday that "life will go on" for the company and blamed bad public relations and naive investors for Valeant's predicament.
To be sure, Valeant's problems started well before the Citron brouhaha. Once a Wall Street darling, driving sales through acquisitions, Valeant said on Oct. 14 that it had been subpoenaed by U.S. prosecutors investigating its drug prices.
Standard & Poor's Ratings Services, which on Friday lowered its credit rating on the company to 'B+' from 'BB-', said Valeant's ability to grow organically will be constrained after Philidor's loss and because of the company's pledge to restrain price increases.
Reporting by Ankur Banerjee in Bengaluru; Editing by Sayantani Ghosh