All posts from Andreas
Andreas in Gainers & Losers,

Investment idea - Allergan

Allergan (AGN) is a diversified global pharmaceutical company developing innovative drugs for ophthalmology, neurology, aesthetic medicine and other specialized fields. The company holds a monopoly on Restasis (eye drop treatment for chronic dry eye) and Botox (used in cosmetology).

Allergan recently released a strong repot for 3Q15. Quarterly revenue spiked 90% y-o-y to USD 4,089 mn due to organic growth, the recent acquisition of Forest Lab., Audent, Durata and a merger with Actavis. Revenue was driven by sales of key drugs: Botox (USD 605 mn), Restasis (USD 328 mn). Quarterly adjusted EPS soared 65% y-o-y to USD 3.48, outpacing forecasts by 8.7%.

Allergan continues its aggressive activity on the M&A market. The company announced a merger with Actavis this spring and sold its generics division, part of Actavis, to TEVA for USD 40 bn this summer. In early November, a new merger was reported with pharmaceutical giant Pfizer. No details were disclosed, but many experts are inclined to believe that Pfizer is more interested in this merger, since it will allow the company to change its US tax residence to Irish jurisdiction, which is much more beneficial.

I regard the business model chosen by Allergan, based on aggressive acquisition of prospective assets in the industry, as quite promising. I raised my mid-term fundamental valuation of Allergan (AGN) to USD 350 and recommend the name as a Buy. The short-term technical target is USD 320.