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.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners