Valeant Pharma (VRX - Analyst Report) has seen its estimates increase due to the recent acquisition of Salix Pharmaceuticals. It is expected that the acquisition will push annual revenues up to about $10 billion, which would be a +20% increase in revenues year over year for 2015. Also, organic growth is expected to be in the double digits over the near term. This combination organic and inorganic growth has made Valeant Pharma the Zacks Bull of the Day.
This Zacks Rank #1 (Strong Buy) stock is a pharmaceutical company that develops manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology, and branded generics. The company produces medicines that meet the special health problems of patients.
It is expected that the purchase of Salix Pharmaceuticals will potentially produce double digit growth in their GI (gastrointestinal) business. Further, Valeant has a strong new product cycle which will help with their organic growth in the near and long terms. Finally, their drug Xifaxan 550, for hepatic encephalopathy, has a PDUFA date of 5-27-15, and is expected to have a positive outcome. We estimate the approval for Xifaxan will be worth between $1.5 and $2 billion in annual sales by 2020.
Increasing Estimates
The table below shows the stock Price, and Consensus Estimates for Valeant Pharma.
Over the past seven days, EPS estimates have jumped for Q1 15, Q2 15, FY 15, and FY 16; Q1 15 rose from $2.14 to $2.35, Q2 15 increased from $2.23 to $2.44, FY 15 jumped from $9.74 to $10.52, and FY 16 went from $12.41 to $13.36.
Positive Earnings Surprise
Historically, Valeant Pharma has destroyed their EPS estimates, and has beaten the Zacks Consensus Earnings Estimate for the past 6 consecutive quarters. Over the past four quarters, Valeant has beaten the Zacks Consensus Earnings Estimate by 80.67% on average. Indicating that not only does Valeant beat the earnings estimates, they crush them.
Bottom Line
The recent acquisition of Salix Pharmaceuticals is a boon for Valeant Pharma. It will improve their GI segment, enable them to offer more products, and will enable revenues to increase at a double digit pace over the next several quarters.
Positive Earnings Surprise
Historically, Valeant Pharma has destroyed their EPS estimates, and has beaten the Zacks Consensus Earnings Estimate for the past 6 consecutive quarters. Over the past four quarters, Valeant has beaten the Zacks Consensus Earnings Estimate by 80.67% on average. Indicating that not only does Valeant beat the earnings estimates, they crush them.
Bottom Line
The recent acquisition of Salix Pharmaceuticals is a boon for Valeant Pharma. It will improve their GI segment, enable them to offer more products, and will enable revenues to increase at a double digit pace over the next several quarters.
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