Little gains may lure investors of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), but the fact remains that the Canadian drug-maker has very bleak future prospects. It won’t be wrong to say that the Laval based-company is slowly nearing its end as it continues to sell-off its business units. The recent deal to sell skincare franchises to L’Oréal and Dendreon to Sanpower does suggest that selling business segments is one of the preferences for the $5.24 billion company to obtain finances.
The fact has also been accepted by CEO Joseph Papa as he seeks to sell all of the company’s non-core assets. One of the important facts that Smart Stock News noticed after the recent divestiture of assets is that they were sold for much higher amounts in comparison to their earnings. This does imply that these business units do have the potential to earn in the future but are not able to do so due to the drowning image of the company.
Although improvements in Valeant’s financial health will be visible, however, the chances that the drug-maker may reduce its guidance shall continue to worry investors. A bull dominated trading session did show an uptrend in the share prices yesterday, but that was only a profit making scenario as shares pulled back later on in the day.
The scenario does not look very compelling for the bulls as short interest remains on the higher side, while sell-side firms also seem to be dissuaded on the company’s future outlook. Whatever the case may be, investors can only expect gains if more liquidity is obtained by selling off business units.
As far as survival is concerned, Valeant might be able to continue in the long-run as it repays its existing debts, but the dominance of the Laval based-company has ended.