Citigroup Says Actavis Is Now Worth $360 Per Share (And It's A Buy)

In a report published Tuesday, Citigroup analyst Liav Abraham commented on a recent meeting with Actavis plc's ACT senior management team in London that increased his confidence in a "swift and successful" integration of Allergan, Inc.

Abraham noted that key growth opportunities for the joint company remain Botox, dermal fillers, glaucoma, Linzess, Bystolic. The analyst added that he is "increasingly comfortable" in the execution of the Namenda switch and of Actavis' pricing/rebating strategy to mitigate the declines of this franchise moving forward.

Abraham also commented on the "bright sparks" in the combined pipeline portfolio that point to several "overlooked opportunities" in areas of competence, including GI (relamorelin), ophthalmology (AGN-195263 in MGD, bimatoprost sustained release), and women's health (Esmya).

"While the focus in the specialty pharma space remains on M&A, we continue to favor names with longer term durable assets and pipeline opportunities to drive organic growth," Abraham wrote.

The analyst concluded by projecting the closing of the acquisition is imminent and that pipeline catalysts in 2015 will highlight the organic growth of the combined entity.

Shares remain Buy rated with a price target raised to $360 from a previous $325.