Valeant higher amid debt offering, insider buying

Valeant moves higher amid debt offering, insider buying

Insurers are dropping Valeant's top products. See Stockwinners.com Market RadarValeant moves higher amid debt offering, insider buying

Shares of specialty pharmacy company Valeant (VRX) are higher this afternoon amid a relatively weak market backdrop.

DEBT OFFERING

On March 12, Valeant announced a private offering of $1.25B aggregate principal amount of unsecured senior notes due 2026. The proceeds of the newest offering will help fund the repurchase of $1.25B of outstanding debt, including its 6.375% Senior Notes due 2020, 5.375% Senior Notes due 2020 and up to $100M of its 6.750% Senior Notes due 2021.

Wells Fargo analyst David #Maris said earlier this week that less than two weeks after filing a shelf offering, Valeant Pharmaceuticals launched a $1.25B offering of unsecured senior notes due 2026.

Based on discussions with his firm’s high yield debt analyst, Maris estimates the debt likely has a 9%-plus coupon.

Valeant is looking to push out 2020 maturities, which may be reflective of its business outlook for the period between now and maturity, Maris told investors earlier in the week.

INSIDER BUYING

In a regulatory filing after the close of trading Tuesday night, Valeant chairman and CEO Joseph Papa disclosed the purchase of 30,000 common shares of the company at a price of $16.05 per share.

EARNINGS

Late in February, Valeant reported adjusted EBITDA was $875M for Q4, as compared to $1.047B for Q4 of 2016, a decrease of $172M. Revenue for Q4 was $2.16B, just below forecasts for $2.2B.

Unfortunately, Valeant also said it expects sales of $8.1B-$8.3B in 2018, below the $8.37B consensus. Shares of the drug maker dropped precipitously after the recent earnings report.

ANALYSTS ON EARNINGS

Soon after Valeant’s Q4 results, Wells Fargo analyst David Maris said Valeant reported “weak” Q4 results, noting that when adjusted for divestitures, two of the company’s three business units showed revenue declines and the third, B&L/International, had a slowdown from Q3 to “only” 4% growth.

Valeant didn’t give an adjusted EPS figure, but he calculates its Q4 adjusted EPS at 98c, compared to his 99c estimate and consensus of 97c. Maris, who said at the time, he does not see “the stabilization, the turnaround, or the transformation Valeant mentions in its earnings presentation.”

Maris kept an Underperform rating on the stock.

PRICE ACTION

Shares of Valeant are up 5.7% to $16.99.


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Tesla drops as executives leave

Tesla drops as second executive departs in less than a week

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Tesla drops as executives leave

Shares of Tesla (TSLA) dropped in Wednesday trading following a report that said a top financial executive is leaving the company, the second executive departure in less than a week at the electric car maker.

LATEST EXECUTIVE DEPARTURE

Susan Repo, Tesla’s corporate treasurer and VP of finance who joined the company in 2013, has departed the company to take on a CFO position at another firm, Bloomberg reported last night, citing a person familiar with the matter.

Repo’s departure comes less than a week after Tesla Chief Accounting Officer Eric Branderiz left the company for “personal reasons,” Tesla disclosed on March 7.

The departures of Repo and Branderiz are the latest in a string of executive departures at Tesla over the last 12 months.

In addition to Repo and Branderiz, Tesla has also lost Jon McNeill, president of global sales and service, who left the company in February to become Lyft’s COO.

The company also lost former CFO Jason Wheeler in 2017. Other departures include Chris Lattner, who left after leading Tesla’s Autopilot engineering team for less than six months, Lyndon and Peter Rive, Kurt Kelty and and Diarmuid O’Connell.

Model 3 Tesla

TESLA UNDER PRESSURE

Tesla is expected to report production and deliveries results for its Model 3 Sedan, which has faced challenges including quality issues and a production halt.

Elon Musk, the company’s CEO, has delayed manufacturing goals several times for Model 3. Reuters said last week that Tesla had to temporarily suspend Model 3 factory lines in February to “improve automation” and “increase production rates.”

Additionally, Green Car Reports said on March 9 that the quality of the 2018 Tesla Model 3 is “terrible,” and that the build quality was “the worst we have seen on any new car from any maker over the last 10 years.”

WHAT’S NOTABLE

Tesla shareholders are expected to vote whether to approve CEO Musk’s $2.6B pay package, which the board recommends and proxy firms ISS and Glass Lewis do not, at a meeting of shareholders on March 21.

Musk has said that he will not accept the package unless the company reaches a market cap of $650B.

VOLKSWAGEN CHALLENGE

Tesla is also facing challenges from other automakers in the electric car space, including Volkswagen (VLKAY), which said it will equip 16 factories to produce electric vehicles by the end of 2022, compared with three currently.

As of next year, the group plans to roll out a new battery-powered model “virtually every month,” CEO Mathias Mueller said.

“When the technology and the price are right, customers are ready to change over. With the I.D. family, we will take the lead in the electric movement,” Volkswagen executive Herbert Diess said yesterday.

PRICE ACTION

Tesla dropped 2.2% to $334.42 in Wednesday’s trading.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.