Valeant Downgraded To Equal Weight From Overweight At Barclays

Barclays analyst Douglas Tsao downgraded Valeant Pharmaceuticals (VRX) to Equal Weight from Overweight and cut his price target for the shares to $34 from $135. The drugmaker closed Friday down 9%, or $2.71, to $26.98. Tsao admits he underestimated the “lasting consequences” of Philidor as well as the near-term impacts of the company’s Walgreens (WBA) initiative.

The downgrade reflects the “greater uncertainties” facing Valeant over the next 12-18 months, the analyst tells investors in a research note. Tsao believes, however, that near-term catalysts such as successful consent with creditors and a “clean” annual report filing could drive shares above $50. Nonetheless, an inability to reach an agreement with creditors or lasting uncertainty around financials could pressure the equity, with $12 per share a possibility, the analyst writes.