Valeant's Ambitious 2016 Goal Excites Investors
While guidance for 2014 meets expectations, Valeant sets its sights on becoming a top-five global pharmaceutical company.
Valeant's (VRX) 2014 guidance, released Jan. 7, was in line with our estimates, but the big news that caught investors’ attention was management’s new goal for the company to become a top-five global pharmaceutical company based on market cap by the end of 2016. Management expects this to require about a $150 billion market cap, up significantly from Valeant’s current $40 billion market cap. While this goal isn’t too surprising to us--CEO J. Michael Pearson had already stated in a letter to employees that he aims for Valeant to become the biggest health-care company in the world--investors seemed pleased to see such an ambitious objective become one of the company’s official targets, and one to which management compensation is benchmarked.
We wouldn’t read too much into the goal, since it will be driven largely by the amount of equity used in futures deals, and could actually act counter to investors’ best interests. We have an Exemplary stewardship rating on Valeant and believe the firm looks out for investors’ best interests, but it could in theory achieve its goal by consistently overpaying for deals with equity, which would harm investor returns.
David Krempa does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.