Bank Of America: We're Still Buying Allergan

• Allergan PLC AGN shares are down 5 percent in the last three months, while shares of Pfizer Inc. PFE have declined 8 percent over the same period.
• BofA Merrill Lynch’s Sumant S. Kulkarni maintained a Buy rating on Allergen, with a price objective of $385.
• Even if the deal with Pfizer does not come through, Allergen is poised to grow organically as well as strengthen its balance sheet, Kulkarni said.

According to media reports, Allergen and Pfizer are closer to a deal that would allow the latter company “to ‘invert’ for corporate tax purposes.” Meanwhile, the US Treasury is getting ready to issue new guidelines that could make inversions more tedious to pursue.

Analyst Sumant Kulkarni said that it was difficult to precisely predict how the Allergen-Pfizer combination, or All-zer, could play out as no deal had been agreed to as yet, and “extraneous pressure remain wildcards.”

Kulkarni pointed out two points related to Allergen, irrespective of whether or not the deal with Pfizer comes through:

1. Allergen appears poised to grow organically, given its healthy product mix and robust pipeline, which includes more than 70 programs in development
2. Allergen could pursue significant M&A sometime in the future, since the generics deals with Teva Pharmaceutical Industries Ltd (ADR) TEVA, expected to close in 1Q16), would strengthen the balance sheet by cash inflow of about $36 billion