Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Valeant analysts are leading from behind. 

Sell-side analysts, many of whom have been Valeant's staunchest defenders, belatedly started to sour on the company Wednesday. It's akin to pouring a dixie cup on the remains of a bonfire. But after the spit-roasting of Valeant's stock -- down 50 percent -- and the company's shambolic earnings call on Tuesday, some analysts finally came to terms with exactly how broken this company is.

Some analysts said they were "humbled" by Valeant's change in fortune -- too late for investors who took years of "buy" ratings at face value. A month ago, 64 percent of analysts tracked by Bloomberg had "buy" ratings on the stock. There was only one "sell" rating among the 25 analysts. Now, there are an equal number of buys and holds, and 4 sell ratings. 

About That...
Analysts are finally starting to re-rate Valeant after a truly disastrous earnings call.
Source: Bloomberg

The consensus price target has come down substantially; $152 a month ago, it hit $92 on Wednesday. But that is still significantly higher than Valeant's current $32 price, and a number of analysts still have hundred-dollar-plus targets on the stock. 

Lagging Indicator
Analysts have been rather slow to catch up to Valeant's downward plunge.
Source: Bloomberg

With some exceptions -- Dimitry Khmelnitsky of Veritas, a long-time critic, has earned a lifetime supply of I-told-you-sos -- a lot of analysts seem to have been unable to look at Valeant with clear eyes. The company's predatory pricing practices, where it bought companies with older drugs and raised prices by as much as 500 percent, didn't do it. The Philidor specialty pharmacy scandal didn't move the needle that much, nor did the company's $30 billion dollar debt load. 

But mounting uncertainty, along with the sheer lunacy of Tuesday's earnings call -- for example, in a press release before the call, Valeant overstated an Ebidta forecast by as much as $600 million and had to correct the typo on the call -- has analysts finally giving up the ghost.

"Management has lost almost all credibility with us and investors," Nomura analyst and longtime Valeant bull Shibani Malhotra wrote in a note Wednesday downgrading the company.  

Investors still have no idea when the company's 10-K will be filed and what horrors it might contain, or what the ad-hoc committee investigating the Philidor relationship will ultimately reveal. 

Valeant's $1.5 billion cut to a 2016 revenue forecast it issued three months prior, along with the deeply unsatisfactory job it did explaining it, suggest more bad news may come and that management doesn't really have a handle on things. There are genuine weaknesses in the business due to inventory issues and health care provider rejection of the company's medicines and prices. The dermatology business, a key growth driver, may only grow in single digits over the next few years, according to Bloomberg Intelligence

None of that gives much confidence in the company's new, lower guidance. Valeant likely has to hit those numbers to meet debt obligations without selling off hunks of the business. 

Some analysts, including Malhotra, point to a possible upside case amid the wreckage. You can buy the company's assertion that the disruption to its business will start to resolve itself this quarter and that its guidance is conservative. There are a couple of potential product launches coming this year. Its investigating committee could give it a clean bill of health, and the company could file a relatively timely and landmine-free 10-K. 

But stitching together upbeat what-if stories, or believing them from Valeant management, is exactly what got so many analysts and investors into trouble in the first place. The case for giving Valeant much benefit of the doubt should have died a final death on Tuesday's conference call.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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Mark Gongloff at