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Valeant Pharmaceuticals (VRX - Free Report) shares have more than doubled since late April as much of the pessimism that was priced into the beleaguered medical empire was likely over-done near $10.

Obviously, with projected EPS this year of over $3.50, the stock appears to be a terrific bargain, even today near $18 and under 5X.

But VRX is still getting put in the cellar of the Zacks Rank because estimates were reduced recently by 2 analysts. And consistent with the longer-term evaporation of the franchise, next year's projections are only registering 0.66% top line growth and 4.4% on the bottom.

The earnings picture could turn around for VRX at any time, but right now analysts are not that optimistic.

Here's a good visual of the situation, courtesy of the Zacks proprietary Price & Consensus chart which plots the stock against annual EPS estimates...



Valeant is in the middle of a large debt reduction program. While it sells non-core assets, there is probably more uncertainty about the timing of a lasting sales and profit turnaround.

For instance, just last week Valeant announced an agreement to sell its Obagi Medical Products business for $190 million in cash to Haitong International Zhonghua Finance Corporation. The $190 million sale price is over 55% below the $437 million VRX paid for Obagi in April 2013.

Some investment bank analysts see more uncertainty ahead. They cite still-high leverage and believe that recent deals, including divestitures of iNova and Dendreon, have had limited impacts on the overall leverage situation.

Until the estimates start going back up for next year, it may be time to shed VRX shares near this $18 resistance level while you can.

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