Shares of Valeant Pharmaceuticals International climbed more than 1 percent on Monday to close at $94.14, two days before it holds its annual analysts day with Wall Street. The beaten-down stock is now up 34 percent from its low and is up for the month. Monday’s stock climb came despite the fact that UBS trimmed its price target on the stock by nearly 10 percent, from $255 to $232.
In a note to clients, the bank says it expects the company’s cash flow guidance will be cut from $7.5 billion to somewhere between $6.5 billion and $7 billion, citing lower sales for two products, higher spending for employee retention and higher legal fees. One good omen for investors: UBS believes going into the meeting, “expectations are so low.” Meanwhile, Reuters reports that the drug giant, under assault for its pricing and accounting practices, hired a lawyer as well as crisis public relations experts with political connections, all based in Washington, DC.
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Canyon Capital has called on Yahoo! to sell its core business, a portion of its assets, or the entire company. “We ask that the Board exercise its duty to act in the best interests of shareholders by quickly unlocking the value of the company’s assets while protecting its current cash holdings,” says the Los Angeles hedge fund firm in a letter to the Internet giant’s board of directors.
Canyon was reacting to the Sunnyvale, California company’s announcement that it has dropped plans to spin off its holdings in Alibaba and to instead mull a spin-off of its core business, its substantial cash, and its Yahoo! Japan stake. In the letter, originally reported in the Wall Street Journal and reprinted in full on CNBC.com, Canyon questions the board’s continued support for the senior management team, citing “its track record, its failure to increase value for shareholders and the recent spate of executive departures.” Canyon, led by Joshua Friedman and Mitchell Julis, asserts that “tightening the market discount” on the Alibaba stake, the Yahoo! Japan stake, and the company’s cash by 20 percent could quickly generate nearly $10 per share of value.
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Deutsche Bank trimmed its price targets on merger partners Dow Chemical and DuPont but maintained its Buy rating on both stocks. It cut its target on Dow from $65 to $62 and DuPont from $85 to $80. “While shares of both companies fell Friday following the announcement, due in part to DuPont’s disappointing ’16 guidance, and there are few near-term catalysts in what is a challenging macro environment, we believe these short-term pressures are more than offset by the substantial long-term value creation potential of the merger and subsequent three way break-up,” the bank states in a note to clients. Deutsche Bank had raised the targets on the two stocks last Thursday, one day before a deal was officially announced.
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Boston-based Adage Capital Management disclosed it raised its stake in Transocean Partners by more than 50 percent, to about 2.28 million shares, or 5.51 percent of the offshore drilling rigs company, which is a subsidiary of Transocean Ltd. The company, which has been hammered by the collapse in oil prices, has seen its stock nearly halve this year.
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New York-based Davidson Kempner Capital Management raised its stake in Atlanta-based BMC Stock Holdings to more than 10.9 million shares, or 16.7 percent of the provider of building materials. On December 1, BMC Stock Holdings merged with Stock Building Supply Holdings, Inc. and Building Materials Holding Corporation.
