VRX update

vrx march 3 2016

Our target was always around $50. This is based on bubbles bursting and returning to a level below the starting point. A few things have happened since our last blog.

Hillary Clinton angrily denounced the company for its predatory pricing, mentioning a very specific senior citizen who essentially could no longer afford the medication. The price had gone from $180 to $18,000 for a certain dosis.

The CEO is back in the saddle after a short leave of absence for medical reasons, hopefully without having to use any of the company’ medications.

The company is now under investigation by the SEC for bad behaviour.

RBC Capital Markets analyst Douglas Miehm , yesterday March 1, downgraded the company and lowered the target by US$100 to US$85 (about C$115), still about 30% above the present price. The stock is now “sector  perform” down from “outperform”. But if you are wondering if you should perhaps sell now that the stock has lost 78% from the peak, you may find it heartening to know that this analyst still things the company has a bright future.

From an EW perspective it is most likely that the stock completed a 4th wave triangle (which may have started a little earlier than you think) and is now thrusting down. The $50 target is reasonable in this context. For those that speculate, this stock should be a buy at about that level of $50 for an upside target of , possible, $150.

As a practical point, one should not forget that investment advisors, certainly if they are working on a discretionary basis, are seriously conflicted if their own research departments go negative on a stock they hold for their accounts. Essentially they have to find the courage to sell the stock , or are forced to, and face the music. This usually takes a little time as these advisors are mostly tone deaf when it comes to losses. Deutsche Bank “suspended” their rating, Scotia is reviewing and no doubt there are hundreds more that are going to the same thing amplifying the swings in the market.