Allergan Considering All Strategic Options 'With A Sense Of Urgency'

Allergan plc Ordinary Shares AGN continued its two-week, 16-percent rebound Wednesday, and RBC Capital Markets anticipates 28 percent of additional upside.

The Rating

Analyst Randall Stanicky maintained a Buy on Allergan with a $213 price target.

The Thesis

Management’s afternoon investor conference convinced Stanicky that Allergan is urgently evaluating all strategic options with an expressed “bias for action." (See the analyst's track record here.)

“In our view, it is going to keep asset sale/break-up debate in the stock and specifically around how much value can be created,” Stanicky said. “We continue (and as we have highlighted since October) to see meaningful value that can be unlocked with ‘Growth-co’ alone worth about $200 per share.”

Allergan continues to expand its toxins portfolio, and it considers its leading Botox treatment insulated from competition by the hurdles limiting biosimilars, including a lack of regulatory pathways and interchangeability, according to RBC Capital Markets.

“It won't eliminate concern, but it helps,” Stanicky said. 

Also of note: Allergan has accelerated its $2-billion buyback program and expects to complete it in April, well ahead of the year-end target.

Price Action

Allergan added a couple dollars on RBC’s reaffirmed confidence to close up 2.4 percent Wednesday. At the time of publication, it was set to open up marginally Thursday.

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Photo courtesy of Allergan.