Revenue Forecast Sends Valeant Pharmaceuticals Stock Spiraling

The unexpected drop could have skeptics piling on

Feb 28, 2018 at 9:39 AM
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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.

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