VRX restating earnings...BLATANT frontrunning

[Daal]

This restatement looks meaningless
"Correcting the misstatements is expected to reduce reported 2014 GAAP EPS by approximately $0.10 and increase 2015 GAAP EPS by approximately $0.09"

It has little or no impact of things going forward. If thats the type of thing the adhoc committee is going to be finding then that's GOOD news

 

[Zestilio]

eyeing short opp

 

[newwurldmn]

Valeant's EBITDA must be > 3x debt service to avoid a default on its senior debt. It cant be much over 3x currently. Razor's edge.

I don't know what their covenants state, but the company generates 50% operating margins and 75% gross margins. Even if sales fall they will be able to cover their interest payments and they have no debt due until 2018. The concern is the ability to pay down the debt. If they can stabilize the business and PR issues, I think this stock is worth 110 if not, then it goes to 40.

It's definitely not for the faint of heart.

 

[newwurldmn]

eyeing short opp

was that from reddit also?

 

[debitspread]

No, reddit has higher standards... "Eyeing" gives him the option of later claiming to have sold the top tick.

 

[destriero]

I haven't looked it up this morning, but I'd seen their op margins in the high 20s, low 30s.

I have no idea if the numbers are accurate, but I am sure this guy is simply regurgitating their actual reporting. I don't see how they can avoid a debt downgrade in 2016. Their balance sheet is pretty sensitive to rho.

http://seekingalpha.com/article/369...ebitda-interest-ratio-required-debt-covenants

 

[newwurldmn]

I haven't looked it up this morning, but I'd seen their op margins in the high 20s, low 30s.

I have no idea if the numbers are accurate, but I am sure this guy is simply regurgitating their actual reporting. I don't see how they can avoid a debt downgrade in 2016. Their balance sheet is pretty sensitive to rho.

http://seekingalpha.com/article/369...ebitda-interest-ratio-required-debt-covenants

I will read the article later (as it involves a login) but this is what I saw in BBG for T12M

(in billions)

10 Revs
2.5 COGS
7.5 Gross Profit
2.7 Operating Expenses and expensed R&D
2 Depreciation
2.5 in Operating income

ebitda of just under 5Bn and capex of about 200MM make FCF (pre-tax and pre interest expense) of 4.8Bn. It's not quite the 3x. But there's margin of safety.

I think the market is expecting a downgrade as bonds are trading at 9%ish yield. The company does have a lot of rho exposure but that's years away. The equity call option has a lot of vol here. If the perception changes to that they can stop the bleeding and just maintain their current revs at current margins I think the stock can easily be worth 110.

 

[felixbocharov]

5% up today pretty weird move.

 

[OptionGuru]

5% up today pretty weird move.

Not weird. It's known as Volatility.

 

[newwurldmn]

5% up today pretty weird move.

there was fear that there was going to be significant restatement of earnings related to philidor (or whatever) and it turned out not to be meaningful. short squeeze.