On Tuesday’s morning trading, shares of Valeant Pharmaceutical has plummeted to as much as 40 percent with a Relative Strength Index (RSI) reading of 26.1, hitting below the oversold threshold.
According to an article from the Forbes, a stock with RSI below 30 can be considered as an oversold stock. As of late, Valeant’s share hits the $37.24 per share level. The report noted that Valeant’s current RSI readings indicate that is has exhausted itself as a result of heavy selling in the past.
“A bullish investor could look at VRX’s 26.1 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side,” a report from the Dividend Channel as published by the Forbes reads.
The same report shows that for the period of 52 weeks, VRX’s shares hit a lowest point at $37.24 per share. During the same period, the firm’s share peaked at $263.81. On the last trading day, it plummeted to $38.47 per share.
Based on a report from a financial think tank Zacks, the reported decline in VRX’s shares was attributed to the poor performance of the company’s fourth quarter 2015 figures. It added that the Q4 2015 financials of the pharmaceutical firm was a direct result of the drop in the firm’s wholesale and retail sales.
Zacks noted that VRX posted earnings of $2.51 per share, which is slightly below Zack’s consensus estimates at $2.64 per share.
In a separate report from the Street Insider, Deutsche Bank financial analyst Gregg Gilbert, said the recent figure poses operational challenges on the part of the company. This, according to Gilbert, would hinder some investors’ confidence with the company’s performance for this year. Gilbert added that this would likely to happen even if the company lowered its expectations for this year.