Shares of Valeant Pharmaceuticals International, Inc. (VRX) are under pressure in the pre-market session Tuesday, falling more than 11% to $25.35 after the embattled drug company reported first quarter earnings that showed a wider-than expected loss. Combined with weak guidance for the second quarter, the optimism recently created from the arrival of its new CEO seems to have disappeared. (See also: Bill Ackman’s Pershing Square Down 18% in May.)
The Quarter That Was
For the quarter that ended March, the Canadian-based company reported a loss of $373.7 million, or $1.08 per share. This reverses a profit of reporting a profit of $2.36 per share in the same quarter a year ago. On an adjusted basis, when taking out one-time gains and costs, the Laval, Quebec-based company said it had a loss of $1.27 per share, which missed Wall Street’s estimates for earnings of $1.42 per share.
First quarter revenue came to $2.37 billion in the period, which beat Street forecasts of $2.36 billion. The revenue marked a rise of 9% year over year, topping last year’s mark of $2.19 billion. The revenue growth was boosted by its acquisitions of Salix Pharmaceuticals and certain assets of Dendreon Corp.
“The first quarter’s results reflect, in part, the impact of significant disruption this organization has faced over the past nine months,” new CEO Joseph Papa said in the statement.
The company, which is under pressure to cut its drug prices, slashed its 2016 profit forecast, suggesting Papa won’t turn things around as quickly as Wall Street expected. Valeant forecasts full year adjusted earnings to be between $6.60 to $7.00 per share, the company said in a statement Tuesday. This compares to prior forecast of $8.50 to $9.50 per share, whcih the company set in March under then former CEO Michael Pearson. Wall Street analysts were looking for earnings of $8.49. (See also: 3 Lessons From Hedge Funds’ Favorite Stocks.)
The Bottom Line
VRX stock closed Monday at $28.85, down 0.07%. The share have declined 72% so far in 2016, compared with a 3.2% rise in the S&P 500 (SPX) index. Over the past twelve months, the shares have declined 90%, while the S&P 500 index has risen 0.23%. VRX stock has a consensus hold rating and an average analyst 12-month price target of $44.50, implying a 54% rise from current levels.
Originally posted on Investopedia: Valeant Stock Falls on Wider Loss, Guidance Miss