Shares of Valeant Pharmaceuticals slumped for the second straight trading day on Monday, erasing more than $6 billion US of market value from the drug company since last Thursday.
Shares of Montreal-based Valeant were down $12.84, or 11 per cent, to close at $104.16 on the TSX. The shares had lost another $11.39 on Friday.
The plunge followed a report Friday morning from Wells Fargo analyst David Maris, who initiated coverage on the company with an "underperform" rating.
"We believe the Valeant board and management have made decisions that may have put Valeant at significant business and reputational risk," Maris wrote.
His damning report outlines what he sees as a number of risks to Valeant's earnings. He also has questions about its liquidity.
Other analysts aren't nearly as pessimistic about Valeant stock. The majority of analysts who cover the stock have a "buy" recommendation with target prices well above current levels.
But the Wells Fargo report was enough to send many investors fleeing.
On Wall Street Monday, Valeant shares plinged $9.07 to $75.92 US on heavy volume of 28.6 million shares.
Extreme volatility is nothing new to Valeant stockholders. On the TSX, Valeant shares have a 52-week high of over $347. That was reached last August. In July, it became the most valuable company on the Toronto Stock Exchange, surpassing RBC.
But it wasn't long before that shares started steadily plunging. They were worth less than $100 by November following a number of negative developments.
The launch of a new drug price probe by the U.S. Senate forced Valeant execs to defend large price hikes in some of its drugs. CEO Michael Pearson has promised minimal price increases on its products in 2016.
The stock price was also hit by allegations from a short-seller that the company's accounting practices don't add up. Valeant has repeatedly insisted that its accounting is fine, but launched an internal review last fall to determine whether there was any wrongdoing in its relationship with U.S. mail order firm Philidor. It has severed ties with Philidor.
Valeant, worth $116 billion last July, is now worth about $40 billion.
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