Ackman's Latest Remarks Level Valeant Pharmaceuticals Intl Inc (VRX)

Valeant Pharmaceuticals Intl Inc's (VRX) positive momentum has stalled, after Bill Ackman said the drugmaker won't be selling Bausch & Lomb

by Alex Eppstein

Published on Apr 8, 2016 at 11:59 AM
Updated on Jun 24, 2020 at 10:16 AM

After a couple days of strong gains, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has resumed its longer-term trend lower. The losses come after activist investor and VRX board member Bill Ackman said the drugmaker will not be selling its core Bausch & Lomb unit, but only non-core assets. Suffice it to say, bullish options traders can't be very happy with today's stock performance.

Specifically, VRX has shed 5.8% at $33.46, succumbing to pressure from its descending 20-day moving average. Longer term, the stock has plummeted 87% since its all-time high of $263.81 in early August amid a series of scandals, a number of which have been related to the drugmaker's questionable pricing practices.

As alluded to, options traders have taken a glass-half-full approach toward VRX, buying to open nearly twice as many calls as puts during the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resultant call/put volume ratio of 1.90 outstrips nearly four-fifths of readings from the past year, confirming the bullish bias.

Analysts, on the other hand, are anything but sold on Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Over two-thirds of brokerage firms consider the stock a "hold" or worse. On a related note, market pundit Jim Cramer said yesterday VRX has a number of considerations working in its favor -- including Ackman's support -- but warned investors to be cautious due to the drugmaker's $30 billion debt load and bleak sales outlook.

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