Emma Asma Cornwall
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Emma Asma Cornwall in Gainers & Losers,

Valeant Pharmaceuticals pleased investors - will it last long?

Valeant Pharmaceuticals International managed to please its shareholders Tuesday morning. Valeant reported second-quarter sales of $2.4 billion and adjusted earnings of $1.40 a share. Both fell short of analyst expectations for the third consecutive quarter. Still, the stock rallied sharply after Valeant reaffirmed its full-year guidance for sales and adjusted profitability metrics and announced a new sale of one of its drugs to raise cash, according to WSJ.

Valeant said Tuesday it started making a gross profit on new dermatology prescriptions filled through the Walgreens pharmacy last week. Still, a turnaround in that business already was assumed in existing guidance.

Meanwhile, revenue from its best-selling drug, the gastrointestinal treatment Xifaxan, was $200 million, down slightly from the first quarter. CEO Joseph Papa said an inventory drawdown, and lower average selling prices of the drug, caused the soggy results. Existing company forecasts of $1 billion in annual Xifaxan sales now seem far-fetched.

Valeant is a rather volatile stock in a bad way, it tends to drop significantly whatever unpleasant happens, so I can't say I'm too relieved by the results - one should wait and see before go long here