Morgan Stanley ups target price for Valeant Pharmaceuticals

The worst was past for beleaguered US drug outfit Valeant Pharmaceuticals, analysts at Morgan Stanley mused.

As the company renegotiated its debt covenants its shares would benefit, they said.

"Risk of severe financial stress should diminish as [debt] covenants are renegotiated and [Valeant] pays down debt, and deleveraging should drive equity value accretion," Morgan Stanley analyst David Risinger said in a research note sent to clients.

In turn, he bumped up his target price from $27 to $42.

His new valuation also took into account the risk of increased competition from generic rivals to its Isuprel and Nitropress products in the coming six to twelve months.

Valeant was also already past the risk of drug prices being reset, an event which had already materialised.

As of 15:32 BST shares in Valeant were up by 8.80% to $29.13 on the NYSE.