Valeant Pharma: Moving back downVRX may, at first glance, look like the bloodshed is over and is moving to recovery. Not just yet. The daily MACD and StochRSI are inching toward sell indicators (see screenshot) and despite the markets upward movements today (Mon 12/14), VRX's recovery was pretty modest as more shareholders exit as they see the fall incoming.
Bottom line: Put options are a possability for short-term holding if you have the risk appetite. If you don't, then definitely wait to buy (back) in if you have been considering it. If you're holding this in hopes of shaving some of your losses or bought thinking it was recovery time, sell. Sometimes the most profitable thing you can do is take a loss.
VRX's financials aren't bad by any means, but they're product pipeline is pretty weak. Consider Addyi, the "female viagra": in the first month on the market only 224 rx's for it were sold. The market is very narrow since it is only considered safe in post-menopausal women who don't drink and think its pretty dramatic side-effect profile is worth the risk. VRX has even hired on a crisis-management firm in response to antipicated F.T.C action in regard to their pricing practices.
Valeant should have never reached as high as it did and now the correction is coming. VRX has been around a while but thier $31bln market cap is absurd. They have a price to earnings of 54(!), an earning per share <$2, and still have a fairly high debt-to-assets ratio. Compare those stats to Shire who is $38bln but have an earning per share of $15, and a price-to-earnings of only $12.21.
Pharmaceuticals
Johnson & Johnson vs USDJohnson & Johnson has seen extreme price consolidation since last November. Since they are a highly diversified healthcare company, currency translations affect their bottom line quite substantially. With the recent contraction of the US Dollar, Johnson & Johnson has broken out of a prolonged trading range. If the dollar continues to contract against other foreign currencies, Johnson & Johnson will make better on their hedges and increase the bottom line substantially, thus increasing free cash flow and overall economic opportunity.
Cup and Handle Pattern in Lannett CoWe seem to be getting a cup and handle forming in LCI at the moment, a classic pattern favored by the O'Neil school of thought. In my book this is an excellent company going for a good price, and with current merger and acquisition activity in the sector I think it has a catalyst for investor interest.
When a stock hits 50 on the Twiggs Momentum scale (50 day or 10 week) it is no mean feat and a sign of strength.
$VRX - Possible downfall, acqusition of $AGN not doneDue to worse than expected ER, and lowered guidance, and top of all failed $AGN acquisition, it is very possible that $VRX is going to $90-$100 price level. Company is not profitable and even if their international profits rise (mostly Russia and Europe), there are problems in creating sustainable growth.
VRX, breaking Bad or breaking Dead.Boy, does VRX have shtty fundamental, but interesting technicals. I used to hate geometry when I was in high school, but it looks like it finally paid off.
I used dotted line to visualize the way that VRX could've gone if the Allergan deal doesn't exist.
VRX rallied 1000% in the last 4 years, the Allergan deal is like a life support machine for Valeant right now. Although some people argue Valeant can go after other companies if this one didn't come through, but this tug of war is hurting Valeant really bad. Now everybody (even those don't own or never even heard of this stock, many of whom will become potential shorts by the way) now knows Valeant has heavy debt burden, shortsighted/unsustainable operating model, ruthless tradition of slashing R&D, and fishy accounting practice, the list goes on.
At this point, there is 1 catalyst to keep VRX going, dozens to drag it down.
