Ted Macklin Valeant Pharmaceuticals VRX-T DON'T BUY Feb 26, 2004

This is kicking around the $20 range. It has picked up recently, along with the entire pharmaceutical industry. Instead of being “extremely speculative” he would call it just “speculative” at this stage.

Has never been an owner of this. The stock had a nice bounce, but she still would not be a buyer. They've sold off some drugs, refinanced and pushed back some of the maturities on their debt, and thinks this is part of the reason why the stock has moved. It needs clarity on where they are going to get their future growth.

He’s always very cautious with fallen angels. It almost takes a miracle to bring them back to life. The company has a huge debt. They still have some assets that are worthwhile, but are trying to work their way out of a very difficult situation. A long, hard road ahead before this company gets out of the woods.

Although a lot of the bad news, drama and carnage is behind it, he wouldn't be a buyer. There isn't any clarity on how they are going to make money in the future. It’s difficult to see a clear path to profits and growth in those profits.

Their biggest challenge is restructuring, which previous management took up on a manic hike and drove off a cliff, and has left the company saddled with $27 billion of debt. The challenge for new management is to shed assets without shedding all the associated profitability. They are having some success having divested some assets. The problem is that a lot of the EBITDA is evaporating along with those asset divestitures. The bond market is taking a bit more constructive look at the company, although the credit rating is still deeply entrenched in the junk category. This is trading at 6X earnings, which tells you the market is deeply sceptical that they are going to achieve the consensus earnings forecasts this year. It's very much a show me story. He would steer clear.

This is in the category of "too tough to figure out". There are so many moving parts. The business is in a de-leveraging state where they are trying to sell off assets from years of the acquisition binge to pay down debt. The new CEO has been pretty aggressive in selling off assets, trying to raise cash. It still has a lot of financial leverage, and is very hard to analyse. There are better ways to make money.

He would look for a different one to consider buying. It is complicated, more so than other pharmas. It has a lot of debt, there are regulatory issues, and governments are trying to push down the price of drugs. He might own JNJ-N because they have enough bets in enough places.

The stock is no longer hot and still has problems but they are moving in the right direction: selling off assets, paying down debt, but the financial statements are still horrific. Revenues are coming down and the debt load is huge. If it finally turns, though, it is so well followed that it could have a real run to the upside. It is difficult to figure out short term price points for this stock.

This is the Lazarus story of 2018, back from the dead. They are not anyones favorite stock. Even though they have sold off a lot of assets, they still have a lot of debt on their balance sheet and he called their profitability dubious, going forward. They have cleaned up a lot of their mess but they have a long way to go before becoming the kind of stock that he would consider for his type of portfolio. The debt burden in a rising interest rate environment, with many maturities that must be rolled over, poses too much risk.

We’re dealing with the ashes of the former company. They’re going to change their name. His model priced is $33.48 (US $) which is 45% higher than the current price. The stock has major volatility. He likes this space (he also holds TEVA and Endo International) because it has been crushed.