Valeant Pharmaceuticals International Inc.’s disclosure it is the subject from the SEC probe was enough to convince Douglas Miehm at RBC Capital Markets to finally downgrade the stock .
The analyst also slashed his price target on Valeant share to US$85 from US$194, which still represents upside of roughly 30 %.
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“Info on the probe weren’t provided, but we’re feeling when Valeant counsel didn’t view it as essential to disclose the subpoena in those days received, it absolutely was likely considered a ‘minor’ issue,” Miehm told clients.
He noted this enhances the group of issues investors will seek clarity on before they decide to potentially purchase again.
“As a result, management and Board credibility may, unfortunately, be further eroded for a while,” the analyst said, adding that it’ll likely lead investors to question what remains undisclosed which may be released with Valeant’s delayed 10-K filing.
RBC’s rating on Valeant moves to sector perform from outperform.
The filing delay of Valeant’s audited annual report may also violate convenants within the bonds.
GimmeCredit analyst Vicki Bryan noted these require company to supply quarterly and annual reports to bondholders within the same deadlines essential for SEC.
“Meaning Valeant may require consent from bondholders C for a small charge, we advise C whether or not this requires a temporary waiver to purchase it more hours to launch its annual report,” she said inside a report.
So if Valeant’s 10-K filing is delayed for a specified duration to require this kind of process, Bryan believes it’ll signal much more trouble about its financial results and potential customers.
