Joseph Papa, CEO of the controversial Valeant Pharmaceuticals , disclosed his purchase of 202,000 shares of VRX stock at the price of $24.48 per share.  The total transaction is valued at close to $5 million, and disclosure of the purchase has helped to boost investor sentiment on Valeant shares today.  Should you be bullish on Valeant though?  Shares have lost a lot of weight over the last year, but the 89% stock price loss is warranted.  Valeant shares have faced major backlash because of congressional and SEC investigations over its accounting methods. 

VRX stock has lost 19% of its value in June because it missed first quarter earnings expectations.  Upon the Q1 earnings release, VRX has also lowered its own earnings expectations for this year.  This has left the sentiment on Valeant extremely bearish for the most part.

Valeant is a Zacks Rank #5 (Strong Sell), and for good reason.  After all, 18 analysts have revised their quarterly earnings expectations lower for VRX over the last 60 days.  No analysts have revised earnings expectations higher for this quarter, next quarter, the current year, or even the next fiscal year.  20 analysts have lowered their EPS estimates for this fiscal year, as well as the next.

VALEANT PHARMA Revenue (Quarterly YoY Growth)

VALEANT PHARMA Revenue (Quarterly YoY Growth) | VALEANT PHARMA Quote

Our quarterly EPS consensus has trended lower over the last 3 months.  The estimate is 42% lower compared to where it was just 90 days ago.  What’s even more alarming is the fact that our current year EPS consensus has shrunk by 43.95% over the last 90 days. 

As estimates trend lower, you may be better off waiting for VRX’s EPS expectations to bottom out, as we have yet to find out what the company’s true earnings potential is.

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