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Valeant’s Latest Acquisition Target: Perrigo’s CEO?

Shares of Valeant Pharmaceuticals International ( VRX ) rose sharply and fellow specialty drugmaker Perrigo ’s ( PRGO ) fell Friday on reports that the former is about to hire away the latter’s CEO. Late Thursday, the Wall Street Journal quoted anonymous sources saying that Valeant is hiring Joseph Papa if it can get Perrigo’s board to void a noncompete clause in his contract. On Friday morning, Perrigo issued a brief statement saying that it would not comment on “speculation,” which is the only official word from either company so far. Valeant has been hunting for a new CEO since March 21, when activist investor William Ackman moved to the board and tried to order the company’s growing chaos. The stock lost more than 80% of its value since a scandal related to a pharmacy partner broke last September, forcing Valeant to strike a new distribution deal with Walgreen Boots Alliance ( WBA ) that was accompanied by across-the-board price cuts. A disastrous Q4 report and guidance cut, along with an internal investigation that accused former CFO and current board member Howard Schiller of misconduct, eventually turned even bullish analysts against Valeant’s management. Papa, meanwhile, has run Perrigo for 10 years and has a largely successful track record. Under his watch, the company’s revenue has more than tripled, the stock has climbed eightfold, an inversion deal moved headquarters to low-tax Dublin, and Mylan ( MYL ) attempted a hostile takeover that Perrigo successfully fought off. IBD Take: Perrigo was once a hot stock, but not lately. Learn why in IBD Stock Checkup Perrigo’s once-steady profit growth has gotten uneven in the last couple of years, however, and the stock has declined more than 40% since its Mylan-induced high last April. It currently holds a mediocre IBD Composite Rating of 40. This change has led some analysts to worry about the implications of Papa’s departure for Perrigo. “Papa has become the face of Perrigo during his long tenure as CEO,” wrote Jefferies analyst David Steinberg in a research note. “However, with the exception of CFO Judy Brown, the company’s other executives — including John Hendrickson, who was appointed President in Oct. 2015 — are largely unfamiliar to the investment community. “Further, the timing couldn’t have been more inopportune. Mr. Papa is potentially departing prior to the announcement of Q1 results, and this follows a string of difficult quarterly financials — particularly in the company’s flagship consumer business.” Guggenheim analyst Louise Chen agreed, noting that Perrigo is widely expected to miss Q1 estimates and lower its guidance. “There has been debate about senior management change at Perrigo, but we don’t think the Street was thinking that it would actually happen or be this soon,” Chen wrote. Perrigo stock was down 5.8% in late-afternoon trading on the stock market today , near 121, after hitting its lowest level intraday since August 2013. Valeant stock was up 7.7%, near 36.

Microsoft, Google Bury The Hatchet Amid EU Regulatory Probe

Microsoft ( MSFT ) and Alphabet ’s ( GOOGL ) Google have agreed to withdraw regulatory complaints against one another, following up on an agreement to end patent infringement litigation last September. The move to withdraw regulatory complaints comes as the European Union’s antitrust chief intensifies a probe into Google’s Android software business. The EU also is investigating whether Google favors its own shopping service in Internet searches. Microsoft says that it’ll now stay out of any regulatory inquiries in Europe and other regions that involve Alphabet and Google. “Microsoft has agreed to withdraw its regulatory complaints against Google, reflecting our changing legal priorities. We will continue to focus on competing vigorously for business and for customers,” Microsoft said in a statement . Google also issued a statement that said: “Following our patent agreement, we’ve now agreed to withdraw regulatory complaints against one another.” Microsoft will drop its membership in two groups that have lobbied vs. Google, says a Re/Code report . The EU antitrust chief is also probing contracts with mobile phone makers as well as wireless service providers that sell devices using Android software. Both companies late Thursday posted Q1 earnings misses that sent shares of both down in the stock market today . Microsoft stock was down 7.5% Friday afternoon, and Alphabet stock was down 5.5%. Losses widened for Alphabet’s “Other Bets” moonshot projects, while Microsoft’s talk of weakness in the global economy surprised at least one analyst.

Maxim Q4 Guidance ‘More Impressive’ On Likely Flat Samsung Sales

Maxim Integrated Products ( MXIM ) is offsetting Samsung’s expected flat June quarter with wins in fitness wearables, tablets and smartphones, CEO Tunc Doluca told analysts late Thursday during the firm’s fiscal Q3 earnings conference call. In afternoon trading on the stock market today , Maxim stock was up more than 1.5%, above 37. Shares hit an all-time high of 42.01 on Oct. 28, but dipped in January and February before a pint-size recovery. Maxim stock is down 4% for the year. For its fiscal Q3 ended March 26, Maxim reported 41 cents earnings per share minus items on $555.3 million in sales. EPS climbed 2.5% year over year, but sales dipped 4%. Maxim’s EPS topped by a penny the consensus of 27 analysts polled by Thomson Reuters and sales were in line, and both metrics touched the midpoints of Maxim’s earlier guidance. On a year-over-year basis, Maxim’s consumer, communications/data center and computing sales were down 9%, 10% and 30%, respectively. Industrial sales were flat, but automotive grew 25%. Current-quarter guidance for $555 million to $959 million in sales and 45-51 cents EPS minus items would be down a respective 1% and 12%. Consumer and automotive segments are expected to be “strongly up.” At least three analysts boosted their price targets Friday on Maxim stock. Pacific Crest analyst Michael McConnell noted Maxim’s Q4 guidance was “even more impressive” considering likely slow sales at Samsung. Samsung comprises about 15% of Maxim’s sales, McConnell estimates. This is “a sign that Maxim’s diversification strategy is paying dividends,” McConnell wrote in a research report. He boosted his price target on Maxim stock to 41 from 37 and reiterated his overweight rating.