Valeant Pharmaceuticals Intl Inc (VRX) Halted Amid 10-K Filing, Board Shake-Up

Valeant Pharmaceuticals Intl Inc (VRX) finally filed its 10-K financial report, while its board of directors is seeing major changes

Apr 29, 2016 at 9:59 AM
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Valeant Pharmaceuticals Intl Inc (NYSE:VRX) filed its long-awaited annual report this morning and subsequently restated its fourth-quarter results -- revising its adjusted per-share earnings down to $1.55 from $2.50. The 10-K financial report technically wasn't due for another month, but the drugmaker said in recent weeks it was aiming for a late-April filing.

Also, just minutes ago, the company announced five current independent directors -- including Bill Ackman -- will not be standing for re-election, while Valeant's new CEO, Joseph Papa, has been nominated. VRX was halted on the board shake-up, but has since started trading. Good news for bullish options traders, though, is that the shares were last seen up 0.7% at $35.49.

Call buying on the beaten-down stock has been popular in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.54 calls for each put over the past 10 weeks. The corresponding call/put volume ratio ranks in the high 82nd percentile of its annual range. Likewise, VRX's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.90 -- lower than 94% of all comparable readings taken in the prior year.

On the flip side, short sellers and analysts may be shaken by the stock's early gains. Short interest on VRX exploded nearly 90% during the last two reporting periods. As such, some of the recent call buying may be a result of shorts hedging their bearish bets. Meanwhile, 65% of brokerages tracking the drugmaker's shares consider them a "hold" or worse.

History seems to be on the side of the bears. While Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has made strides in recent weeks, it remains a long-term underperformer. This year alone, the stock has lost over 65% of its value, and it has also underperformed the broader S&P 500 Index (SPX) by more than 65 percentage points during the past 60 sessions.

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