Allergan Should Hit $370 Despite Tax Inversion Drama, Analysts Predict

• Shares of Allergan PLC AGN have appreciated 19.47 percent year to date, from a low of $255.1 on January 6.
• Susquehanna’s Andrew Finkelstein has maintained a Positive rating on the company, while raising the price target from $350 to $370.
• Finkelstein expressed optimism regarding the company’s growth profile, given that Allergan has addressed key issues that are still plaguing several of its peers.

Analyst Andrew Finkelstein mentioned that the near term outlook for the company depends to a large extent on Allergan reaching a deal with Pfizer Inc. PFE, “despite the latest Treasury action to deter inversions.”

There have been reports that Pfizer is close to making an offer worth $370-$380 per share. “Confirmation that Treasury is making good on its threat of further anti-inversion actions does not mean a deal is off the table but underscores the likely delicate negotiation over price and risk-sharing,” Finkelstein explained.

The Treasury move is likely to prove incrementally positive for overseas based acquirers, while being incrementally negative for U.S. based companies and overseas acquisition targets.

According to the Susquehanna report, “Curtailing inversions would give foreign companies more leverage in acquiring U.S. targets. Retroactive rules could hurt recently inverted companies.”

Finkelstein believes that Allergan’s pipeline supports organic growth. Combined with the company’s standalone financial position, this would justify a meaningful premium to its pharma peers.