Revenue Forecast Sends Valeant Pharmaceuticals Stock Spiraling

The unexpected drop could have skeptics piling on

Feb 28, 2018 at 9:39 AM
facebook twitter linkedin

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) stock has plunged nearly 10% to trade at $16.71, after the Bausch + Lomb parent said revenue fell 10% in the fourth quarter to $2.16 billion -- just below the average analyst estimate. And while the drugmaker's adjusted earnings of 98 cents per share were one penny more than the consensus forecast, VRX gave disappointing full-year revenue guidance.

VRX stock is no stranger to volatile moves, with the shares more than doubling from their early November lows near $14 to their mid-January 52-week peak at $30.56. Today's plunge has the security trading near levels not seen in almost four months -- and breaching several key technical levels along the way, including its 200-day moving average.

Most speculators appeared to be anticipating a post-earnings breakout for Valeant Pharmaceuticals stock. While options traders were loading up on long calls, short sellers were exiting their bearish bets. Short interest fell nearly 16% in the most recent reporting period to 23.22 million shares -- the fewest since May 2016. The stock could be at risk of additional losses, should shorts start to increase their exposure.

Analysts, meanwhile, have maintained a mostly skeptical stance toward the shares, but three out of 11 still maintain a "strong buy" rating. Plus, the average 12-month price target of $20.25 stands at a roughly 14% premium to current trading levels. Should VRX shares continue to struggle, a round of downgrades and/or price-target cuts could create even bigger headwinds.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners