Coverage: Investors wait for Valeant’s earnings

Troubled drug company Valeant Pharmaceuticals International Inc. reports earnings on Tuesday, and investors are anxious to see if the company has improved its performance.

Richard Saintvilus of TheStreet.com looked ahead to the earnings projections:

Valeant stock rose last week, perhaps in applause because it will finally do what all public companies are expected to do: announce a quarterly report. The standards for the stock have been lowered.

Tuesday’s report is Valeant’s second quarterly result since its pricing and compliance scandals unfolded. “Less bad” is the best investors should hope for.

For the quarter that ended in March, Wall Street expects the company to deliver earnings of $1.37 per share on revenue of $2.36 billion, translating to a year-over-year decline of 42% and a rise of 8.6%, respectively. For the full year ending in December, earnings are projected to decline 16.6% year over year to $8.47 per share, while full-year revenue of $10.86 billion would mark a 3.4% rise from the year-ago quarter.

Valeant shares closed Friday at $28.87, down 1.84%. The shares have gotten crushed this year, plunging 71%, compared with a 2.7% rise in the S&P 500 (SPX) . Over the past 12 months, Valeant shares have cratered almost 90%, while the S&P 500 index has declined only 0.71%.

Charley Grant of The Wall Street Journal noted that the earnings are the first under a new CEO:

Yet big questions remain. Investors still don’t have much of a feel for what kind of profitability Valeant can expect now that it has sworn off its old strategy of splashy acquisitions and hefty drug-price increases. Sales of most of Valeant’s top 30 products fell sequentially in the fourth quarter as insurance companies and pharmacy-benefits managers pushed back against the company.

Valeant didn’t reiterate its full-year forecast, which former CEOMichael Pearson gave in March. There is a risk Mr. Papa could decide old targets—just over $11 billion in sales and about $10 a share in adjusted earnings—were too ambitious.

Valeant’s plan for reducing its $30 billion of long-term debt will be another issue. Investors will want more detail on what assets Valeant considers nonessential to its core business and, therefore, ripe for divestiture.

Jonathan Rockoff and Michael Rapoport of Dow Jones Newswires report that Valeant seeks a return to normalcy:

To paint a picture of normalcy, the Canadian drug company and its new chief executive, Joseph Papa, will have to address some pointed questions about its performance and prospects.

Some analysts expect Valeant will cut this year’s financial projections again, as it did in March. Mr. Papa is trying to get a handle on the impact of Valeant’s commitment to discount some high-priced drugs and of a partnership with Walgreens Boots Alliance Inc. to fill prescriptions for skin and other drugs.

“I would expect guidance to come down,” says Irina Koffler, an analyst at Mizuho Securities who rates Valeant underperform.

Valeant has projected it will earn $1.18 to $1.43 a share in the first quarter on an adjusted basis that strips out some costs and uses a new tax-reporting method. The company expects first-quarter revenue of $2.3 billion to $2.4 billion.