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'Valuation Dean:' Valeant is a buy

"If you were devising a company, which was in the dark side, Valeant would be it," Aswath Damodaran, a professor of finance at New York University's Stern School of Business, told CNBC on Thursday. Still, the investor recently bought shares of the company, which has been under fire recently.

Popularly known as the "dean of valuation," Damodaran told CNBC that he recently purchased the stock at $32 a share, but he believes its true value $43 a share, 34 percent higher.

"In every conceivable way this looks like a bad company, but at the right price, even a bad company could be a good investment," he said in an interview with "Closing Bell." Valeant's problems include losing credibility with investors, delaying its financial filings and have a board of directors in "flux," he said.

While he doubts that Valeant can return to being the "roll-up monster" that it was prior to September 2015, it'll be a "traditional pharma company with fairly significant eye care and cosmetics arm," he said.

Valeant Pharmaceuticals is down 67 percent year-to-date and has plunged 84 percent in the past year. Jim Grant, a long time Valeant bear, told CNBC in March that the company has an "existential threat to solvency," because of its accounting procedures and filing issues. That very same month, Valeant released a statement warning investors that it was at risk of defaulting and filed unaudited earnings in place of its annual comprehensive overview.

"The overall business model was more than dubious, and now it's actually shattered," Grant said, as he told CNBC he doubts the company could make a comeback.

Damodaran argues, however, that he priced in the "bad news" that encouraged Valeant to delay fillings into his valuation; he lowered revenue and its operating margin expectations. In addition, he thinks that the company may be pushed to defaulting, which subsequently will force it to make concessions, but he doesn't foresee bankruptcy.

"They're talking about not being willing to sell Bausch + Lomb because it's a core business, but I think it really depends on how desperate they end up becoming," he said. "If they become desperate enough, they have to think about selling those businesses and paying down the debt" he said.