Valeant Share Price Surges on Citigroup Recommendation
November 19 2015 - 5:10PM
Dow Jones News
The price of shares in Valeant Pharmaceuticals International
Inc. has surged, reversing momentum after a Citigroup Inc. research
note made favorable comments about the drug company and recommended
buying its debt.
Valeant shares closed trading on New York Stock Exchange on
Thursday at $84.00, up 15.7%, on heavy volume of 25.3 million
shares.
The move contrasts with a rough past month for Valeant, in which
its share price declined more than 50%.
Thursday's action enables Valeant to recoup at least a small
part of the heavy losses the stock has seen since falling from an
August high of $262.52 a share. The company has faced a string of
questions about its drug pricing, disclosure and business strategy,
especially concerning its now-ending relationship with a specialty
pharmacy that distributed its drugs and helped drive Valeant's
revenue growth.
The Citigroup note initiated coverage on Valeant's debt with an
"overweight" rating. While the bank said Valeant has faced
challenges recently, "we think much of the bad news has been priced
in," and the debt is "a compelling buying opportunity."
Citi said Valeant and other specialty pharmaceutical companies
are "asset rich, high cash flow companies," and "we think it is
important that investors not lose sight of the broader fundamental
picture."
Valeant has about $30 billion of debt, around $4 billion of
which comes due in 2018. Most of its roughly $19 billion in bonds
have been trading in the range of 80 to 90 cents on the dollar,
according to FactSet.
Valeant bonds due in 2025 traded at 82 cents on the dollar on
Wednesday to yield 9%; On Thursday, they were up to 82.5 cents for
a yield of 8.9%. Bond yields fall when prices rise.
The Citi note also made favorable comments about two other
specialty pharmaceutical companies, Endo International PLC and
Mallinkrodt PLC, initiating coverage of both companies' debt with
"marketweight" ratings. Endo share price was up 0.7% Thursday
afternoon. Mallinkrodt shares were up 4.3%.
Liz Hoffman contributed to this article
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(END) Dow Jones Newswires
November 19, 2015 16:55 ET (21:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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