Valeant Plunges for Second Day as Analyst Says ‘Too Much Risk’

  • Wells Fargo writes 2nd note after rating stock `underperform'
  • Adding to concerns is uncertainty about earnings release date

Valeant Pharmaceuticals International Inc. slumped as much as 15 percent, the biggest drop since November, as a selloff extended to a second day after a Wells Fargo analyst added to his negative report about the company.

The embattled specialty pharmaceuticals company fell 12 percent to $75.22 at 2:51 p.m. in New York, after dropping 9.7 percent Friday following the report by Wells Fargo analyst David Maris, who initiated coverage with an underperform rating. In a new note Monday, Maris gave two additional valuation models that gave the stock a value as low as $62, or 27 percent less than Friday’s closing price. He kept his price target range at $65 to $68.

“Valeant shares currently carry too much risk for us to be comfortable recommending them,” Maris wrote.

The shares have plummeted since their $262.52 August peak on concerns about the drugmaker’s now-severed ties to the mail-order pharmacy Philidor Rx Services, high levels of debt used to make acquisitions, and most recently the status of Chief Executive Officer Mike Pearson, who is on medical leave. Earlier this month his interim replacement, Howard Schiller, faced pressure at a Congressional hearing about soaring drug prices.

Adding to concerns is uncertainty about when Valeant will report its fourth-quarter earnings. The company hasn’t set a date yet for the release.

“Valeant was expected to report today and there is no word from IR or management on when they will,” Elizabeth Krutoholow, an analyst with Bloomberg Intelligence, wrote in an e-mail, referring to investor relations. That is creating some concern, she said.

Valeant is dropping amid a generally upbeat market, with the Nasdaq Biotechnology Index up 0.5 percent.

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